I spent the last few trading hours of 2018 shopping for stocks, taking advantage of recent historical trends. The market has bounced back in a major way the last five times that it's taken a double-digit percentage hit in a single quarter, so I figured I'd buy into some companies that I've been eyeing even as many investors were going the other way.
I initiated positions in Glu Mobile (GLUU +0.00%), SeaWorld Entertainment (SEAS 4.98%), Sonos (SONO 1.05%), and Tencent Music Entertainment (TME 0.37%) last Monday afternoon. I also added to my existing position in Roku (ROKU 2.37%). We're just a few trading days into my biggest shopping spree in years, but I like what I'm seeing. All but one of the five stocks are trading nicely higher. Let's dive into the reasons why I singled out those particular investments.
Image source: SeaWorld Entertainment.
Glu Mobile
Check out the latest Glu Mobile earnings call transcript.
Most of the stocks that I bought were trading at deeply discounted prices from earlier highs, but that wasn't the case with Glu Mobile. The smartphone gaming app developer was near peak prices last week, and today the stock hit its highest level in more than 11 years.
There's surprising range within Glu Mobile's hottest titles. You tap into your interior decorator to excel at Design Home, swing for the fences in the Major League Baseball-licensed Tap Sports Baseball, and have Kim Kardashian West help you navigate your rise up the Tinseltown elite in Kim Kardashian: Hollywood. Mobile gamers are fickle, but Glu Mobile has a way of keeping its pulse on what app fans are craving.
Momentum is on Glu Mobile's side. It has blown through its guidance and raised its outlook every single quarter over the past year. Some will argue that the stock will cool off after soaring 122% in 2018, but they also said the same thing after the shares surged 88% in 2017. Glu Mobile is a rising star until its pipeline proves mortal.
SeaWorld Entertainment
Check out the latest SeaWorld Entertainment earnings call transcript.
It took the theme park operator a few years to get over the negative publicity stemming from the Blackfish documentary, which took the chain to task for keeping orcas in tanks and performing stunts for visitors, but we're finally at the point where SeaWorld is coming up for air. Revenue and attendance are moving sharply higher in 2018 after four consecutive years of declines.
SeaWorld Entertainment may have been coming off depressed levels in recent years, but it's hard to ignore three consecutive quarters of better than 8% top-line growth. SeaWorld's growth in 2018 topped all of its major industry rivals. SeaWorld is making it happen by adding world-class coasters and immersive family rides, making the three namesake parks about more than just its marine life shows. The shares followed suit by rebounding in 2018, and now it can spend 2019 working on beefing up its margins instead of counterattacking protestors.
Sonos
Check out the latest Sonos earnings call transcript.
The sell-off in late 2018 was particularly cruel to IPOs with unfortunate timing. Sonos went public at $15 in late summer, just as investors were starting to feel queasy about the stock market. It's not the only case of poor timing for the pioneer of wireless speaker systems. It hit the exchanges just as tech giants with dirt cheap virtual assistants were flooding the market with their affordable smart speakers.
Sonos remains a broken IPO, and it was trading in the single digits when I got in last week. The company isn't going to fade away like many of the tunes you can stream on its hardware. Revenue rose 27% in its latest quarter, and it sees 10% to 12% top-line growth in fiscal 2019. The competitive marketplace isn't ideal at the moment, but feel Sonos will get bought out if a tech giant feels that it's slipping in this niche.
Tencent Music
My one purchase from last Monday that continues to be underwater is Tencent Music. China's largest streaming music service went public at $13 last month, and stateside investors remain skittish when it comes to Chinese growth stocks.
Tencent Music's reach is massive, controlling roughly 75% of China's streaming music market across all of its subsidiaries. There are more than 800 million monthly active users here, and while most of them are freeloaders, we have seen revenue skyrocket 84% through the first nine months of 2018. The market's not playing the same key as Tencent Music right now, but that should change in 2019 as investors wake up to the monster growth.
Roku
Check out the latest Roku earnings call transcript.
I added to my Roku position last Monday, and the stock has responded as one of this year's biggest initial winners. Roku is powering a growing number of smart TVs, and its namesake streaming media devices are selling well. There were 23.8 million people using Roku at the end of September, 43% more than a year earlier.
Engagement is where this story gets even better, as those users streamed 6.2 billion hours of content in Roku's latest quarter -- a 63% pop. Average revenue per user has risen 37% to $17.34 over the trailing 12 months, as Roku collects a piece of some of the premium streaming services that folks sign up for through its operating system.
Roku is one of today's biggest gainers after announcing that it now has more than 27 million users, another period of better than 40% growth in users. The rest of the metrics should continue to impress when Roku announces its quarterly results in a few weeks.
