Investors with a broad education can use knowledge from other disciplines to improve their investing results. Those with even a passing background in science may recognized Newton's first law of motion, which states "an object in motion tends to stay in motion unless acted upon by an outside force." The same can be said of successful companies and is part of the logic behind adding to your winners. What made these companies winners in the first place will likely continue until something changes.
On this clip from Motley Fool Live, recorded on Feb. 22, "The Wrap" host Jason Hall, Fool analyst Auri Hughes, and Fool.com contributor Danny Vena offer up three stocks near all-time highs that are still worth buying today.
Jason Hall: But something that we've learned, Tom Gardner and David Gardner have taught us is winners keep winning. What I wanted to ask you guys, Auri, I'm, going to ask you to kick this off too, is what's the stock that's near its all-time high right now that you'd buy right now?
Auri Hughes: I don't know if this is near its all-time high but valuation-wise, it is definitely very expensive, and that is Shopify (NYSE:SHOP). It's one that's very intriguing to me, and if I had to make an exception about expensive stocks that trade on price-to-sales [ratio], I would really consider Shopify because I believe Tobi Lutke is an incredible founder and entrepreneur and leader.
It's one of these stocks that someone and described as unbounded growth where you don't know if Tobi is going to do something that's going to expand the addressable market or allow this business to layer on more sales and more market that wasn't anticipated by the market. I think when we look at what Shopify does in the adjacent businesses it could get into, there's just huge potential. So I think that's one that I would be willing to take a chance on with the valuation and I think is very interesting and could be one of those very important companies, maybe highest returning companies or one of the great stocks we look back on.
Hall: Yeah, it's only about 6% off its all-time high so I think that's definitely fits this bucket here. Almost 58 times sales. Fits the bucket here. [laughs] You go through it and it's misunderstood and you think about all of those metrics, I think you're spot on, Auri. That's great. Danny Vena, what you've got for us?
Danny Vena: I was actually looking at one of the stocks, so folks who tuned in last week know that I bought a bunch of stocks last week that I couldn't talk about. One of the stocks that I bought right at its all-time high was HubSpot (NYSE:HUBS).
HubSpot is not a company you hear talked about that much. It's a relatively small company, under $30 billion market cap. But this is a company that started out as an inbound marketing company and has expanded to where it's now, about a full-on customer relationship management, or CRM, platform. Software-as-a-service company.
It just announced its earnings last week. They had a couple of big headlines. They surpassed 100,000 customers for the first time and $1 billion in annual recurring revenue. Fourth-quarter revenue was up about 35% year-over-year, subscription revenue was up 36% year-over-year, the total customer count was up 42%. The company announced record customer dollar and net revenue retention rates. Hitting on all of the metrics that count.
They also turned around and gave guidance that was extremely bullish and quite a bit more than what analysts' and investors' expectations were.
So I think when you, when you think about the customer relationship management space, you look at some of the big guns in that space like salesforce.com, and you think about the size that a company like this can grow to, it's tremendous opportunity. I think the last time that I checked, they were saying they thought their total addressable market (TAM) was around $45 billion annually, and that was before they made these acquisitions. Salesforce.com right now is a $221 billion company.
HubSpot is definitely in a space where it can grow, and I think this is a company that investors want to keep an eye on.
Hall: Another company that just had a tremendous year and a lot of people are looking at is this perfect company for the pandemic is Teladoc (NYSE:TDOC). You see here's the stock price, so this is a stock that trades for 24 times sales, stock price is up almost 140% over the past year, the stock is down about 9% from its all-time high. So it certainly meets those ideas in terms of this is a crazy, wildly highly valued stock.
But here's the bottom line. The company is not quite worth $40 billion, it's growing its revenue at a very high rate. But here's the thing guys. This is not a company that its thesis is built on needing a pandemic to be wildly successful.
If you followed Teladoc for more than a year, if you followed the company two or three years or more, then you should understand that the thesis is about driving down the cost of care, about making healthcare more accessible for more people. Helping payers, helping patients, delivering better outcomes, that's really the thesis that underpins Teladoc's platform. It's not just making it so that people can visit a doctor and not have to worry about getting COVID.
That's just an "oh by the way," that's also been an incredible accelerant for the business to create a larger beachhead to establish more relationships with more providers, more payers across the entire ecosystem of healthcare. It's been an accelerant to building their business, but it's not a requirement.
As matter of fact, I think the bigger tailwind for Teladoc over the next 20 years is going to be the increase in the number of seniors in the United States. Over the next decade, we're going to see the number of 65-plus Americans reach 80 million. There's going to be more than 40 million Americans that are over age 80.
Immense increase in the need to provide healthcare for those folks, and everybody is going to be scrambling to do it effectively and to lower those costs. Because everybody bears the burdens of increased healthcare costs, and Teladoc is just really well positioned to that. You think about things like diabetes, being able to treat chronic illnesses, this is a company that's going to continue to play a really important role in that. Even at this valuation, I think this is a company you should own for the next 10 years.