The coronavirus pandemic is finally winding down, but the crisis is far from over. The United States is still reporting an average of over 10,000 new confirmed cases every day. And many experts fear a potential second wave of infections as the economy reopens which could devastate the economy.
In times like this, investors can protect their portfolios by buying stock in companies that seem to thrive in these uncertain economic conditions.
Here are three technology companies that fit the bill. The first is Upwork (UPWK -0.89%), a freelancing platform poised to surge in the rapidly growing gig economy. Then there are Zoom Video Communications (ZM -0.82%) and DocuSign (DOCU -2.35%) -- two growth companies that will benefit from increasing interest in work-from-home opportunities.
All three businesses have managed to maintain their breakneck revenue growth despite the coronavirus pandemic, making them excellent stocks to buy in June.
Image source: Getty Images.
1. Upwork
Upwork is an online freelance marketplace that connects talented remote workers with businesses that need their services. The company is expected to grow at a compound annual growth rate (CAGR) of 15.3% until 2026. Upwork is a great way for investors to benefit from the rapidly growing freelance worker industry and the coronavirus-resistant business model it operates in.
Upwork primarily serves small- and medium-sized businesses in relatively coronavirus-resistant industries. According to a research report by Goldman Sachs, two-thirds of Upwork's clients are in industries with low or moderate recession risk, and only 1% are in industries with high exposure, while the rest are unspecified.
The company also runs a managed services platform that helps clients outsource their talent acquisition and contract workforce, which can be used to facilitate social distancing.
Upwork's performed well in the first quarter, with revenue growing 21% from $68.5 million to $83.2 million, despite the pandemic's negative effects on the wider economy. The company's core freelancer marketplace grew 24% from $60.5 million to $74.8 million while the managed services platform grew 5% from $8 million to $8.4 million.
2. Zoom Video Communications
Zoom Video Communications is a coronavirus-proof growth stock that looks set to continue beating the market over the long term. The company runs a cloud service that enables web meetings and virtual collaborations, and it has seen business boom amid the coronavirus pandemic as people take meetings online to slow the spread of COVID-19.
Zoom's stock price has soared by around 192% year to date as social distancing efforts boost demand for its services. The company boasts a market cap of around $56 billion, which is 90 times its fiscal 2020 revenue of $622.7 million.
Can Zoom justify this massive top-line valuation? I think the answer is yes.
While Zoom's seemingly exponential growth will eventually slow down, the stock looks poised to continue beating the market for the foreseeable future because of its breakneck revenue growth and potential to expand into additional cloud-based services like Zoom Phone, a system that combines phone, chat, meetings, and videos into one platform.
Zoom reported first-quarter earnings on June 2, and the results were a slam dunk. Revenue soared by 169% from $122 million to $328.2 million, and operating cash flow jumped by a staggering 1,065% from $22.2 million to $259 million. Management projects full-year fiscal 2021 revenue to come in at around $1.8 billion, which would give Zoom's stock a valuation multiple of 31 times sales -- a reasonable valuation considering its rapid growth.
3. DocuSign
DocuSign hasn't missed a beat during the coronavirus pandemic, with shares soaring around 86% year to date compared with a 1% decline in the S&P 500 over the same time frame. Like Zoom, the company looks set to continue beating the market because of its rapid revenue growth and coronavirus-resistant business model.
DocuSign provides subscription-based electronic signature solutions to businesses and individuals, mainly in finance, healthcare, real estate, and other industries. This is a hypergrowth market projected to expand at a CAGR of 28.6% until 2030.
DocuSign reported first-quarter earnings on June 4, and the results reflect strong, coronavirus-resistant growth. Sales surged 39% from $214 million to $297 million, and this was driven by an increasing number of enterprise and commercial customers -- the total of which grew from 60,000 to 89,000 in the period.
DocuSign is guiding for full-year fiscal 2021 revenue to come in at around $1.3 billion, which means that, with a market cap of $25 billion, the stock is trading at just 19 times projected 12-month revenue. That looks like a reasonable valuation considering the company's growth rate and rapidly expanding addressable market.
