The five best stocks in December 2021
Adobe (ADBE) helps creative people with its products. The company has three platforms that operate on the principle of “software as a service” (SaaS).
All three platforms form a comprehensive solution that helps Adobe customers create content (video, images, or text). The company’s transition to the SaaS business model at one time led to impressive revenue growth and made this corporation a leader in its field. In September 2021, Adobe announced the integration of PayPal payment options into its platforms.
The new functionality will be available in the personal account of the b2b client. Customers will be able to start using the new option before the end of 2021. The cooperation of the two tech giants should have a beneficial impact on the financial performance of these companies. In August 2021, Adobe acquired a platform for collaborative video editing Frame.io.
At first, Adobe tried to develop a similar software but eventually decided to purchase Frame.io since many Adobe customers already use the products of this company. This purchase expanded Adobe’s toolbox, increasing the value of the company’s products. By the end of 2022, Adobe’s management plans to earn $147 billion, and given the Issuer’s strong competitive position, this goal is more than achievable.
3rd quarter of 2021, the Issuer’s net profit reached $1.21 billion, an increase of 27% compared to the 3rd quarter of 2020—earnings per share at $2.52, with a forecast of $2.27. Adjusted earnings were $3.11 per share.
According to Gartner’s research, Adobe has become a leader in marketing automation and digital commerce solutions in the modern world. The Issuer’s shares have grown by 44% since the beginning of the year, and their growth is unlikely to slow down shortly. According to analysts’ expectations, revenue for the full fiscal year will exceed $15.8 billion.
Increase of almost 23%, which corresponds to the pace before the pandemic. Maintaining the current growth rate, the Issuer will increase its market capitalization to $300 billion in the coming years. In general, this paper ends 2021 on a positive note.
At the moment, the company’s shares are in the area of annual highs – $ 689. The tool has fully recovered all the recently incurred losses but has not yet received drivers for growth. CNN analysts expect a 4% increase in the paper from current levels.
Marvell Technology Group (MRVL) is an American fabless company specializing in memory, microcontrollers, and telecommunications equipment.
The Issuer’s shares are trading positively in 2021, thanks to the high demand for its chips, which are used in advanced technologies, for example, in 5G networks, cloud computing, and the automotive industry.
Another factor in the growth of the Issuer’s shares was the latest estimates of Wall Street analysts after the company’s management’s speech at the “Investor Day,” where they reported an increase in revenue and profit of the company.
According to the company’s forecasts, revenue growth is expected with an average annual growth rate (CAGR) of 10% to 15% in the long term. In addition, the management of Marvell now predicts that the indicator of long-term gross profit will be around 64% to 66%. A year ago, this figure was 63% to 65%.
Moreover, MRVL’s operating margin is between 38% and 40% in the long term, compared to the previous estimate of 35%. For the low operating margin level, we should thank the slower than expected growth in operating expenses.
Marvell Technology Group forecasts that its long-term operating expenses will amount to 26% to 28% of revenue, compared with last year’s estimate of 28% to 30%. According to forecasts, we should expect accelerated revenue growth against the background of growing demand for semiconductors in the coming years.
One of the promising areas is the automotive market, where Marvell can earn $ 1 billion from the sale of chips. In the fiscal year 2022, the Issuer plans to increase revenue from the automotive industry by seven times compared to the fiscal year 2021. Therefore, the technical picture on MRVL paper is favorable for purchases.
The trend is upward, and corrections, if they occur, do not last long. At the end of November 2021, the price reached a new historical level of around $75. According to CNN experts’ expectations, the asset will continue to grow towards the $80 zone.
Zscaler (ZS) is an American company working in the field of cloud services and cybersecurity. The Issuer ensures the information security of its clients. Zscaler solutions allow customers to securely connect to applications managed from inside and outside, regardless of device or location.
For comparison, the Issuer has earned $536 million over the past 12 months, that is, less than 1% of its real market opportunities. Moreover, compared to the outdated solutions of competitors, the Zscaler cloud service offers better security. Besides, it costs an order of magnitude cheaper.
These advantages have led to strong financial results. The company is famous not only for its technology but also for its attitude to its customers. Thus, the retention rate increased from 117% in 2018 to 127% in 2021. ZS customers not only regularly pay for services but also constantly buy more expensive protection packages. At the moment, the Issuer does not make a profit, despite the positive free cash flow.
Nevertheless, in 2021, the company’s revenue increased by 56% compared to 2020. that operating expenses also increased, which exceeded the income level, and interest expenses rose more than ten times on depreciation and issue expenses, which led to an increase in losses by 128%. At the moment, buyers control the market and push the paper to new heights.
In mid-November, set a new maximum around $ 376, asset retreated to the level of $330, it rebounded and is now growing steadily. However, according to Marketbeat experts’ expectations, the current growth will not last long, and the asset will soon return to decline. The $320-$330 area is a likely target for correction.
For FedEx (FDX), the “hot” time begins. First, Black Friday, then Cyber Monday, and then the Christmas and New Year holidays are just around the corner. At this time of year, the company is so busy that it hires additional staff every year. By the way, this year, FedEx will hire 90,000 new employees, which is 30% more than in 2020 at the height of the pandemic.
The company believes that consumer spending will increase this year and exceed the levels before the pandemic, which will add to the work of the logistics company. The company will take advantage of the holiday season to go from minus to plus. In the second half of 2021, FedEx shares were falling, and they have already sunk by 21%, having tested the $222 level not so long ago, where there was a rebound and growth began.
According to analysts, increased labor costs, plus disruptions in the global supply chain, are to blame for the decline in the company’s performance. But, by all accounts, the fall of the paper will not last long. FedEx expects that the annual growth in the volume of the US domestic market will be 10%, and the change will continue until 2026.
To compensate for increased costs, the Issuer decided to increase tariffs by an average of 5.9% from the beginning of 2022. It is still difficult to predict how the company’s customers will react to this change. However, suppose the price increase is accepted. In that case, FedEx will receive the double benefit of higher prices and lower costs as the macroeconomic situation improves, which will lead to much higher margins in the future.
If the first six months of 2021 FedEx shares were growing, the negative market sentiment would dominate in the second half of the year. However, after testing the $319 level in May, FedEx securities rolled back to the $220 area. CNN analysts believe that this is the end of the correction and expect a moderate asset growth towards the $290 level.
Nike (NIKE) is the world’s largest sportswear brand, whose sales in the fiscal year 2021 exceeded $44 billion, which is 19% more than in 2020. In addition, the company performed well during the pandemic: it reported a decrease in indicators in 2020, but in the fiscal year 2021, both revenue and net profit of the Issuer increased sharply, exceeding the pre-pandemic levels.
The growth momentum continued in the 1st quarter of 2022 when revenue increased by 16% year-on-year, and net profit increased by 23%, reaching $1.87 billion. However, Nike management recently stated that they had to lower their forecast for the rest of the fiscal year due to supply chain problems.
If we now add the increased risks to the global economy due to the emergence of a new strain of coronavirus, then the projected decline is possible. Online sales through the company’s app can be a lifeline for Nike.
The application gives the company’s customers several advantages that should help maintain customer interest in the products of this sports giant. Over the last quarter, demand for the app has grown by more than 130%. The app is now available in 50 countries.
Nike has recently opened a new research facility. Will develop new products and ways of selling them here to attract customers. The technical picture on this paper indicates the presence of strong buyers in the market. The last wave of stock growth began in October from the $145 level, after which the price updated annual highs.
They are currently at $177. Most CNN analysts believe that these securities still have the potential for growth before the following correction begins. According to forecasts, buyers will move from the current levels towards the $180 zone.
