Following three weeks of chaotic volatility due to the coronavirus pandemic -- including an official end to the 11-year-old bull market -- investors are justifiably anxious about investing right now. With global recession fears looming, it's also prudent to maintain cash savings. In no uncertain terms, it takes considerable courage to buy stocks, as it's impossible to know when the market will bottom out or stabilize.
Here are three stocks currently on sale that courageous long-term investors ought to consider: Apple (AAPL 2.15%), Roku (ROKU 3.51%), and Twilio (TWLO 0.96%).
Apple CEO Tim Cook. Image source: Apple.
Apple
Just as Apple was turning the corner with its investing narrative, the coronavirus outbreak put a quick end to that momentum. The Mac maker reported blowout fourth-quarter results at the end of January, right as the disease was starting to spread outside of China. The booming services business continues to provide high-margin recurring revenue, powered in large part by 480 million paid subscriptions across the tech titan's platforms. Led by Apple, the broader wearables market enjoyed strong unit growth of 82% in Q4, according to market researcher IDC. Apple's wearables business is now the size of a Fortune 150 company.
Apple was among the first tech giants to formally warn that the crisis would cause it to miss its revenue guidance for the first quarter, as the outbreak was disrupting iPhone production while simultaneously hurting demand for Apple products within China. Since that Feb. 17 update, conditions have only worsened, as the disease has now spread to over 100 countries, so the impact to Apple's sales will likely be even greater than anticipated.
Still, Apple's financials remain robust and the company's massive war chest ($99 billion in net cash) will help it weather the downturn.
AAPL PE Ratio data by YCharts.
Roku
A compelling case can be made that Roku's valuation had gotten a little stretched over the past year, with shares exceeding $175 last fall and topping 20 times sales in the process. Importantly, that investor enthusiasm was being driven by incredible fundamentals; Roku's core operating metrics were all marching in the right direction. To top it off, the company just closed out its first billion-dollar year, active accounts reached 36.9 million, and Roku is improving monetization of higher engagement.
Image source: Roku.
As an agnostic platform, Roku is positioned to capitalize on the secular shift to streaming TV as cord-cutting continues to decimate traditional cable operators. Roku helps other streaming services in a plethora of ways, delivering ads to bring in subscribers -- and then earning a cut of subscription sales through revenue-sharing agreements. In addition to premium channels, the company's first-party Roku Channel is helping drive growth in ad revenue. Unlike third-party ad-supported channels -- where Roku only gets a 30% cut of ad inventory -- the company keeps 100% of those ad sales.
The COVID-19 outbreak could even bolster engagement further as more people stay home due to travel restrictions and other precautionary measures. If you're stuck at home, might as well watch TV.
Twilio
Offering a broad suite of communications tools for developers on its cloud platform, Twilio should be relatively insulated from major coronavirus impacts. The company's application programming interfaces (APIs) help automate all sorts of communications, from phone calls to text messages to push notifications, across a wide variety of industries.
Image source: Twilio.
The results that Twilio has been reporting are nothing short of astounding: Revenue last year skyrocketed 75% to $1.1 billion; dollar-based net expansion rate was 136% as Twilio expands relationships with existing customers; and total customers nearly tripled to 179,000. While Twilio remains unprofitable for the time being, its growth compensates for the red ink. Guidance for 2020 calls for sales to jump another 30% to 31% to nearly $1.5 billion.
With Twilio tapping fresh 52-week lows on Friday, shares of this communications tech specialist are undoubtedly on sale -- a perfect opportunity for long-term investors that can withstand near-term volatility.
