Massive Market Sales: 2 Growth Stocks To Buy Now
Black Friday may be the day we partner with the bargains on the shelves, but this year prices have also been slashed on the stock market.
A new variant of COVID-19 has emerged in South Africa, and while we await more information on whether it is more serious than the prevalent strains, investors have chosen to take shelter after governments Europeans immediately imposed travel restrictions.
It can be confusing to see the open sea S&P 500 Stock index down more than 2% in a single day, but it’s not all bad news. Here’s a stock that does well during times of market volatility, and another stock that you should rack up over the long term anyway.
1. The case of Interactive Brokers
The online brokerage giant Interactive brokers (NASDAQ: IBKR) is no stranger to the wild fluctuations of the stock markets. The company has been in business for 43 years, navigating events such as the Black Monday stock market crash in 1987, the dot-com collapse in 2000, and the global financial crisis in 2008.
But in early 2021, it experienced an unprecedented phase of business growth amid the meme stock frenzy sparked by retail traders. In January 2021, it opened a record 116,100 new accounts, 689% more than in January 2020. And since early 2020, it has more than doubled the total number of its accounts receivable to 1.58 million.
Interactive Brokers’ client assets have also more than doubled since January 2020, from $ 176 billion to $ 380 billion today. This suggests that investors are not only increasingly comfortable with owning stocks, but may in fact be drawn to times of market volatility. When it comes to brokerage, the amount of financial assets in accounts receivable is critical, as brokers typically charge a fee based on the volume traded. More assets means more volume, which equates to more income.
While overall growth has slowed from high levels in January this year, most metrics remain high.
New accounts opened
Total shares (shares) traded
Total client assets
$ 162.1 billion
$ 232.6 billion
$ 380.9 billion
Analysts forecast nearly 33% profit growth for the company for the full year of 2021. If it meets expectations, it will have generated $ 3.31 in earnings per share, placing the stock at a multiple price / earnings of 22. By comparison, the S&P 500 trades at a multiple of 28, and the Nasdaq 100 a multiple of 35, so the stock is much cheaper than the market as a whole.
However, the benefit for investors could come in the form of prolonged market volatility caused by concerns about the new COVID-19 variant. This makes Interactive Brokers a great buy in these uncertain times.
2. The case of DocuSign
DocuSign (NASDAQ: DOCU) is a darling of the pandemic market. As the leading digital signature platform, investors in its stocks have been rewarded with 230% returns since January 2020, as the home economy demanded innovative new tools to keep the economy going. Should there ever be a resurgence of COVID-19 restrictions, this company could be in an excellent position to capitalize.
Yet, even if there is none, its diversification into other industries over the past two years makes it a favorable long-term investment. For example, its DocuSign Insight platform relies on artificial intelligence to read and analyze legal contracts to identify troubling or even beneficial clauses.
While not ready to replace your lawyer, it has the potential to be a major cost-cutting tool, especially for companies that issue and receive a high volume of legal documents.
In addition, DocuSign negotiation for Selling power The platform can generate personalized agreements and then act as a collaborative contract negotiation tool between internal and external parties who can make adjustments in real time.
The effects of remote working in the home work economy on this business are evident in the growth in revenue and profits from fiscal 2019 (DocuSign’s fiscal year ends January 31).
2019 financial year
Fiscal year 2022 (Estimate)
$ 701 million
$ 2.09 billion
Earnings per share
The increase in DocuSign’s earnings per share stems in part from the diversification of its business and in part from the growth of its more than one million paying customers. Rapid revenue growth combined with a high gross margin (which hovers around 80%) means the company can aggressively invest in growth as fixed costs quickly become a smaller share of overall sales, resulting in a sharp increase in profits.
While the COVID-19 situation remains uncertain, DocuSign is shaping up to be a great long-term investment that could also offer protection to your wallet if things take a negative turn.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.