Americans were just beginning to feel they could put the pandemic behind them. Most states had fully reopened for business, and the vaccine rollout allowed them to reduce their mandates on wearing a mask. Some states, such as Florida, Oklahoma, and Texas, did away with them completely and COVID-19 cases remain at some of their lowest levels since the outbreak began.
But now we're warned new variants of the coronavirus are spreading globally, including the particularly pernicious "Delta variant," and now lockdowns could be on the table again.
Image source: Getty Images.
Prospects for a relapse
So far, no new lockdowns have been proposed yet in the U.S., but you can see it happening elsewhere around the globe. Australia has imposed new lockdown orders, travel restrictions are popping up across Europe, and several African countries are clamping down again.
Mask restrictions, though, could make a quick comeback. Recently the World Health Organization said even vaccinated people should wear masks indoors again, and Los Angeles County immediately jumped on board by issuing an edict that "everyone, regardless of vaccination status, wear masks indoors in public places as a precautionary measure."
Although they maintain they don't want to impose new lockdown restrictions, which is why they're trying to remain a step ahead of the virus, it's clear individuals and businesses are not in the clear from being ordered to stay inside again.
Hold out hope
There is a hopeful development after Johnson & Johnson just said its COVID vaccine shows promise against the Delta variant along with other SARS-CoV-2 viral variants, as well as a sustained immune response of eight months so far for the original COVID-19 strain. Investors might still do well to prepare for the worst and hope for the best. The three growth stocks below ought to outperform the market indexes if there are no lockdowns and should thrive if we're ordered back into our homes once more.
Image source: Getty Images.
Ping Identity
There's no question Ping Identity (PING) has been on a roller coaster ride since the pandemic began, but the cybersecurity stock is a sleeper that's ready to roll.
Because its AI-powered identity protection services become more adept at recognizing threats and responding to them more efficiently as time progresses, Ping provides an affordable custom solution to enterprise-level customers. And if we're on lockdown again, a dispersed workforce opens up the potential for more cyber breaches.
Annual recurring revenue (ARR) from subscriptions is picking up steam, and Ping ended 2020 with 38 customers spending over $1 million in ARR. Since there's a lag between when it receives the money and when the revenue shows up on its financial statements due to revenue recognition rules, investors should begin to see the fruits of its efforts in the coming quarters.
First-quarter ARR was up 16% to $233 million, with subscription revenue representing 93% of total revenue. Ping forecasts that ARR will rise as much as 16% in the second quarter compared to last year and be up by a similar percentage for the full year.
That may not seem to be especially robust growth. Still, with subscription gross margins coming in north of 85%, Ping Identity has substantial cash flow-generating capabilities that will allow it to continue investing in the business without sacrificing its profitability or cash flow.
Steady double-digit revenue expansion and juicy profit margins allow investors to buy this growing cybersecurity specialist at less than seven times this year's sales growth expectations.
Image source: Pinterest.
There was one thing people did during lockdowns above all else, and that was tending to their homes. From renovation projects to home decor, people were taking care of their dwellings because they were spending so much time there. Pinterest (PINS 4.04%) was a big help in allowing them to choose, organize, and prioritize their dreams.
Monthly average users (MAU) surged 37% in 2020 to 459 million and that torrid rate of expansion continued in the first quarter with MAUs growing 30% year over year, and now stands at 478 million users worldwide.
More encouraging is where that growth is coming from. Of the 478 million global users, almost 80% came from international markets and they're growing at an annual pace of 37% -- much faster than the 9% growth rate for U.S. users.
Admittedly, Pinterest derives far less average revenue per user (ARPU) from its international users than its American users, $0.26 versus $3.99, but international ARPU is rising at a faster rate than domestic ARPU, or 91% to 50%. Both segments, though, suggest Pinterest is a fast-growing social media business that will accelerate even more if we get stuck at home again.
Image source: Getty Images.
NVIDIA
Graphics card maker NVIDIA (NVDA 6.18%) continues to exhibit broad-based strength across its hyperscale data center business, gaming business, and crypto markets. As a result, it's actually well situated to benefit whether we have lockdowns or not.
It just had an exceptional first quarter with data center revenue running 79% higher, gaming revenue doubling, and the crypto market opportunities expanding.
For example, Canadian cryptocurrency mining company Hive Blockchain Technologies, which mines ethereum and bitcoin, announced it was buying $66 million worth of NVIDIA GPUs and joined its partner network for cloud services.
Now, there's no argument that NVIDIA's stock isn't cheap as shares doubled over the past year and are up 54% in 2021, but its business is an all-weather one that is essential in normal times and critical during crises. As CEO Jensen Huang noted on the company's earnings conference call, "Our partners are launching the largest-ever wave of NVIDIA-powered laptops. Across industries, the adoption of NVIDIA computing platforms is accelerating."
Sometimes a business is worth the premium you pay for it, but it also doesn't hurt to wait for the market to cause it to exhibit weakness. If NVIDIA's stock does pull back, it would be an even better buy then.
