It's a new year, and maybe a new approach to your portfolio is in order. I have a few stocks that I think are the best ones to buy in January. Let's see if you agree.
Teladoc (NYSE:TDOC), Bandwidth (NASDAQ:BAND), and Axon Enterprise (NASDAQ:AXON) have compelling catalysts to push their shares higher this month. Let's break down the bullish argument to own all three of these stocks.
You're seeing Teladoc close out 2020 on the lists of top performers, but here's a starting line stat you probably aren't seeing: Teladoc is down 20% since announcing its deal to acquire Livongo five months ago.
The leading player in telehealth has only gotten more dominant since announcing its head-turning acquisition. Livongo's next-gen way of tackling chronic conditions is gaining traction and generating positive outcomes for members with diabetes. Livongo is just scratching the surface, and the synergies of the now combined companies are off the medical charts.
The pandemic has helped accelerate the business models for cloud-based service providers, but Bandwidth is still not on most investing radars. It should be. Bandwidth helps businesses embed voice, messaging, and 911 access into software and applications.
Business was strong before the COVID-19 crisis, but 2020 was a year of accelerating top-line growth. Every passing quarter finds Bandwidth posting larger year-over-year revenue bursts.
- Q4 2019: 19%
- Q1 2020: 29%
- Q2 2020: 35%
- Q3 2020: 40%
Demand is booming, and it's not just the accelerating revenue gains spoiling that secret. Bandwidth's dollar-based net retention rate -- a popular metric for measuring SaaS stocks -- has risen from 116% to 131% over the past year. In other words, the average returning customer is spending 31% more on Bandwidth than a year earlier.
Bandwidth won't report again until February, so the potential of a blowout quarter is a catalyst that will have to wait. However, with investors looking at cloud-based stocks with accelerating growth and more reasonable valuation multiples Bandwidth could fit the bill.
We have never been as divided as a country as we are right now. Licking the pandemic in 2021 is only going to make us more vocal about these differences, and that will mean more confrontations, protests boiling over, and a good time to have Axon Enterprise on your side.
Axon initially made its mark on civil enforcement with its Taser stun guns, but these days its bigger business consists of its namesake wearable body cameras and the Evidence.com cloud-based platform that offers storage of recorded footage. It doesn't matter where you stand on any of the social or political squabbles. We need visual proof of all interactions and confrontations with law enforcement.
This isn't just a winner for 2021. Axon just capped off what will be its sixth consecutive year with revenue growth of 20% or better. Demand will only intensify in the coming days and weeks with a transfer of power and tensions bubbling as the COVID-19 vaccination process is coming along slower than expected.