Please ensure Javascript is enabled for purposes of website accessibility

Got $1,000? Buying 3 These Stocks Now Could Be a Genius Move

By Brian Feroldi – Updated Apr 20, 2020 at 4:35PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The future looks incredibly bright for these high-growth businesses.

Lots of high-growth stocks were absolutely pulverized in the COVID-19-induced sell-off. The markets have since recovered sharply off their March lows, but there are still plenty of bargains to be had.

Which stocks still look incredibly attractive right now? Here's why Paycom Software (PAYC -1.33%), Twilio (TWLO -2.05%), and Globant (GLOB -0.03%) are three top choices.

Man putting hundred dollar bills in pocket

Image source: Getty Images.

Paycom Software

Some industries naturally benefit from high switching costs, meaning that it would be hard for a customer to switch to a competitor's product. The payroll industry is one. Once a company picks a payroll processor, it becomes a huge hassle to switch to a competing product.

This is why I'm so impressed with what Paycom Software has accomplished. Paycom has consistently grown its revenue over the years as it has stolen business away from industry giants like Paychex and ADP. The company's secret sauce is that it provides a cloud-based software suite that handles a wide range of human resource functions, not just payroll. This has convinced lots of companies to make the switch.

Paycom's financial statements have flourished in response. Revenue has grown 300% over the last five years. Operating leverage has allowed net income to grow more than 950% over the same time frame. The stock has been a multi-bagger in response.

2020 is likely to be a rotten year for Paycom. Unemployment is skyrocketing, so Paycom's financials are likely to take a big hit. Wall Street has knocked the share price down more than 30% from its highs in response. While I wouldn't call Paycom's stock "cheap" -- shares trade for roughly 50 times forward earnings -- this is a very high-quality business that should resume its growth trajectory once America goes back to work. 

Twilio

Twilio has been a great growth stock since it came public, but it isn't easy to make sense of what this company does. Twilio provides a range of application programming interfaces (APIs) that make it easy for developers to build communication tools into their products. Twilio's APIs handle messaging, voice calls, videos, emails, and more. Twilio charges fractions of pennies each time its APIs are used, so it makes sense for developers to use Twilio's tools rather than build them from scratch. 

If you are looking for proof that Twilio's APIs are useful, just check out its customer list. Airbnb, Lyft, Dell, Hulu, Twitter, and Amazon's Twitch are all customers. That's a huge vote of confidence from companies with serious tech chops.

The demand for Twilio's products has been incredibly strong and its growth has been jaw-dropping. Revenue has grown 580% over the last four years, and it's still moving higher. Analysts expect revenue to grow by 26% in 2020 and another 28% in 2021. Those are very healthy numbers.

Twilio's stock isn't cheap -- shares trade for roughly 13 times sales -- but that's considerably lower than it has been at other times in its recent history. With profitability on the horizon and the top line still growing quickly, I think that Twilio is a growth stock that is worth owning.

Globant

Most management teams realize that technology is changing the world and that they need to adapt if they hope to thrive. However, it isn't easy to make big changes. Many companies lack the expertise to take advantage of blockchain, machine learning, virtual reality, and more. How can they keep up?

An increasingly popular answer is to hire Globant, a company that specializes in tech consulting. Globant employs thousands of highly skilled professionals from around the world who receive deep training in the latest technologies and can be dispatched at a moment's notice to help businesses tackle any project that they dream up.

Globant has successfully landed an A-list group of clients from a wide variety of industries that include Disney, LinkedIn, American Express, Coca-Cola, BBVA, and Walmart.Once a client gets onboarded, Globant tends to hang on. More than 90% of Globant's revenue comes from existing customers in any given year.

Globant has come a long way since its founding, but the market for digital services is growing rapidly and is expected to reach $154 billion by 2022. Globant hasn't even come close to capturing 1% of that total, so this is a stock that should be able to grow for years to come. Meanwhile, its share price is down more than 20% from its February highs. That's too good of a deal to pass up.

 

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Brian Feroldi owns shares of Amazon, Paycom Software, Twilio, and Walt Disney. The Motley Fool owns shares of and recommends Amazon, Globant, Paycom Software, Twilio, Twitter, and Walt Disney and recommends the following options: long January 2021 $60 calls on Walt Disney, short January 2022 $1940 calls on Amazon, and long January 2022 $1920 calls on Amazon. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Paycom Software, Inc. Stock Quote
Paycom Software, Inc.
PAYC
$329.99 (-1.33%) $-4.44
Twilio Inc. Stock Quote
Twilio Inc.
TWLO
$69.14 (-2.05%) $-1.45
Globant Stock Quote
Globant
GLOB
$187.08 (-0.03%) $0.06
Walmart Stock Quote
Walmart
WMT
$129.70 (-1.93%) $-2.55
The Walt Disney Company Stock Quote
The Walt Disney Company
DIS
$94.33 (-3.20%) $-3.12
Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$113.00 (-1.57%) $-1.80
American Express Company Stock Quote
American Express Company
AXP
$134.91 (-2.09%) $-2.88
The Coca-Cola Company Stock Quote
The Coca-Cola Company
KO
$56.02 (-0.97%) $0.55
Automatic Data Processing, Inc. Stock Quote
Automatic Data Processing, Inc.
ADP
$226.19 (-0.69%) $-1.56
Paychex, Inc. Stock Quote
Paychex, Inc.
PAYX
$112.21 (-1.04%) $-1.18
Twitter, Inc. Stock Quote
Twitter, Inc.
TWTR
$43.84 (2.57%) $1.10
Lyft, Inc. Stock Quote
Lyft, Inc.
LYFT
$13.17 (-2.30%) $0.31
Dell Technologies Inc. Stock Quote
Dell Technologies Inc.
DELL
$34.17 (-0.06%) $0.02

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
326%
 
S&P 500 Returns
102%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/02/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.