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Market Summary:
The major indices are mixed at midday following an active overnight session in financial markets. The news that the FDA advised to temporarily halt the use of Johnson & Johnson's (JNJ) one-shot COVID vaccine triggered a selloff in risk assets and reopening stocks, in particular, while giving a boost to the tech sector and other "stay-at-home" names.
While the decision could cause delays in the U.S. vaccine push, this morning's losses have been limited and with the U.S. case numbers still being encouragingly low in most states, the economic recovery could still remain on track.
Stock Pick Summary:
With our portfolio bouncing back sharply as we expected, we are ready to capitalize further. Today, we jump on a prolific social media stock. While it trades at a high forward P/E to our liking, we do not want to ignore the strong long term growth opportunity in store. A decline in advertising budgets during the COVID lockdown caused it to incur losses and a revenue dip.
However, subsequently it pulled off a revenue growth of 55%. We expect it to be able to grow both its revenue and earnings by over 40% annually as it looks to further integrate shopping into the platform thereby enabling an e-commerce push. As the number of monthly active users and the average revenue per user grow over time, it will enable it to further bolster its cash flows. It is sitting on nearly $2 billion of cash, that could enable to pursue strategic acquisitions in future.
With an asset-light business model and a strong potential to accelerate cash flows, we are ready to welcome this stock in our portfolio for the long term!
Risk Meter:
Allocation Guidelines:
We don't recommend over investing in any stock. Consider starting with a small amount, say 2-3% of your portfolio's overall value, and add a little at a time.
You could invest as low as $200-$500 on a pick, and even buy just 1 or 2 shares, if you are new to investing, low on cash or just prefer going slow.
For best results, have an intention to hold your position for at least 2 - 3 years in general. However, you can always lock profits sooner if you prefer as every investor has a unique portfolio and different goals.
Consider investing in our multiple stock picks (the more the better).
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Besides the new stock pick, you may also consider diversifying amongst some of the earlier picks from our market crushing portfolio.
Be patient and don't allow daily market swings to unnerve you. Remember, we have a pristine track record over last 10 years, so Buzz with confidence and patience.
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