Estimated read time: 3 minutes
Publication date: 19th Feb 2021 10:21 GMT+1
There is a good chance that equity markets will correct this year. While it remains difficult to predict what will cause the crash or even how steep the market decline will be, investors should note that corrections are part of the economic cycle.
Alternatively, every stock market crash should be viewed as a buying opportunity. You can look to purchase quality growth stocks trading at a discount. Here we look at three such stocks that you can buy if the stock market crashes again this year.
The first stock on the list is Twilio (NYSE: TWLO), a company that provides developers with tools to embed communication features within existing platforms and applications. The cloud-based communication company is trading at a steep valuation and might lose significant value in case markets turn bearish.
It has a market cap of $70 billion while its total sales in the last 12-months stand at $2 billion. In Q4, Twilio reported sales of $548.1 million indicating year-over-year growth of 65%. This rate was higher than its Q3 sales growth of 52%. After accounting for its recent acquisition, sales were up 59% compared with the prior-year period.
Q4 was Twilio’s second consecutive quarter of accelerating growth and the company managed to end Q4 with a customer base of 221,000, up from 179,000 in the prior-year period.
Shares of Alteryx (NYSE: AYX) are trading at 39% below their record high. In case the markets undergo a correction, investors can purchase this large-cap tech stock at a lower valuation. Alteryx estimates its total addressable market at $49 billion giving it enough opportunities to grow its revenue in the upcoming decade.
Analysts tracking the stock expect AYX sales to grow by 13.2% to $561 million in 2021 and by 20.8% to $677.2 million in 2022. Alteryx was impacted by lower-than-expected enterprise spending over the last few quarters.
In fact, Alteryx estimates Q1 sales between $104 million and $107 million compared to the figure of $108.8 million in the prior-year period. Alternatively, if you consider annual recurring revenue which is a better way to measure the value of subscription contracts, the YoY growth figure stands at a healthy 25%.
The Trade Desk
Shares of The Trade Desk (NASDAQ: TTD) more than tripled in 2020 and have gained 1,640% in the last three years. TTD generates revenue via its demand-side ad platform that allows advertisers to create, optimize and launch digital ad campaigns.
It has a content-neutral strategy which means it does not own a proprietary platform similar to Facebook or YouTube. The shift towards e-commerce has accelerated in 2020 and this trend will be a key revenue driver for TTD in the upcoming decade.
The Trade Desk is optimistic about the market potential for connected TVs and it has expanded inventory via integrations with supply-side partners. TTD’s CEO estimates CTV spending to account for 50% of global ad spending while eMarketer expects ad spending to touch $615 billion in 2020.
Disclaimer: The writer is an experienced financial consultant who writes for Finscreener.org. The observations he makes are his own and are not intended as investment or trading advice.
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