In most investment portfolios, a small number of gainers usually represent a large share of the total returns. To get the most out of these winners, investors should resist the urge to sell too early when the stock is rising so much, and instead, let the winners race.
It may be tempting to take profits while they are certain, and it is also tempting to double down on stocks that are falling during times of market volatility in hopes that they will recover. History has shownHowever, these tactics regularly lead to substandard returns and high opportunity costs. Today, let’s look at three momentum stocks that have made significant shareholder gains over the past year and consider why investors are doing a good job of continuing to hold on to their stocks even as they celebrate those paper gains.
1. Group match
With a host of well-known brands that include Tinder, Match.com, OkCupid, Plenty of Fish and Hinge, Match set‘s (Nasdaq: MTCH) The market share in the world of online dating is unparalleled. In fact, the company’s various services are responsible for starting 6 out of 10 relationships starting online in the US, and its most notable successes are Tinder and Hinge – the former is the most downloaded and most profitable dating app worldwide, and the latter’s membership has increased by more than tenfold. Since 2017 to more than 4 million.
Match now has 10.1 million paid subscribers across its platform, generating $ 2.2 billion in annual revenue and $ 258 million in free cash flow. Free cash flow (FCF). In the second quarter, its revenue increased 12% to $ 555.5 million, while its earnings per share increased 13% to $ 0.51.
Subscriber growth saw a devastating decline during the peak of the pandemic in March, but is now back to normal, with an annual average of over 15% as of July 31. The stock is surprisingly good value, with a Price to sales (P / S) 6.5 only. Over the past year, match inventory has increased by more than 40%.
Cramping‘s (New York Stock Exchange: CHGG) Its role in higher education is more important than ever as universities around the world move to online teaching in the face of the COVID-19 pandemic. The company provides writing, tutoring, and personalization solutions to college students, as well as selling and lending textbooks and e-books. A Chegg subscription costs only $ 15 to $ 20 per month – a relative bargain when compared to the time students can save by using the service to help them understand difficult concepts.
During the second quarter, Chegg’s revenue grew a staggering 63% year-over-year to $ 153 million. Net income was $ 10.6 million, compared to a net loss of $ 2 million in the second quarter of 2019. The company added nearly 1.5 million subscribers during the year, bringing its total membership to 3.7 million.
Given the massive adoption of online education that occurred in 2020, Chegg’s growth streak is likely to be far from over. For the full year, the company expects to generate $ 615 million in revenue, up from $ 411 million last year. Since October 2019, Chegg’s shares have risen more than 90%.
3. Teladoc Health
On August 5th Teladoc Health (New York Stock Exchange: TDOC) And the Levongo Health (Nasdaq: LVGO) Teladoc announced a $ 18.5 billion merger to create the largest telemedicine company in the United States to date, and Teladoc was one of the most successful virtual healthcare platforms in the country, with revenues increasing by an average of 67% annually since 2015. The company expects to generate approximately $ 1 billion in revenue in 2020.
Teladoc’s rate of growth naturally accelerated with the advent of the COVID-19 pandemic, increasing the demand for virtual doctor visits. During the second quarter, the company’s paid membership grew 92% year-over-year to 51.5 million, while the total number of facilitated visits more than tripled to 2.8 million. Before the pandemic, only 11% of Americans said they were comfortable using telemedicine services. By the end of the second quarter, this number had increased to 76%.
That’s not all: Teladoc also boasts an impressive 90% customer retention rate and generates up to $ 472 in savings per patient compared to in-person visits. Likewise, 94% of patients who try the same-name Livongo app sign up for a paid membership, which helps them save nearly $ 2,000 a year in medical expenses; App users have reported lower blood pressure, improved weight management, and improved quality of life.
More than $ 250 billion in annual US healthcare spending could shift to virtual service providers over the next few years, creating a huge opportunity for Tilladoc and Livongo. Moreover, the two should be able to achieve significant revenue synergies after the merger by encouraging their customers to subscribe to and benefit from the two sets of services. They can accelerate their revenue growth by expanding their business internationally.
The sky is the limit for Tilladoc and Livongo. Management projects that will joint entities generate up to $ 3.5 billion in revenue and $ 591 million in operating income, excluding non-cash expenses (EBITDA) By 2023. So if you are prof Healthcare An investor making good paper profits from Teladoc’s 166% increase over the past year, wait a little while. There is more to come.