Opportunities Abound; Warner Music IPO, Zoom Will Grow, CrowdStrike Now!
The End Is Near
Wall Street began the day with a friendly voice, a companion unobtrusive … well, at least as unobtrusive as any companion can be right now.
The ADP private payroll figures arrived today, and there’s really only one way to describe them: “obviously an awful number, but not as catastrophic as expected.”
That quote comes from Mark Zandi, the chief economist at Moody’s Analysts. Moody’s compiles the monthly private payrolls report with ADP.
According to the report, the U.S. economy lost 2.76 million jobs in May due to the pandemic. Economists expected a much larger loss of 8.75 million jobs.
With magic at its fingers, Wall Street went off on its way on the open road. The resulting bull rally now puts both the S&P 500 and the Dow firmly out of correction territory.
It’s beginning to look like the worst has passed … that COVID-19’s impact on the U.S. economy peaked in April. If true, that could be a major boon for both the economy and the market.
Wait … is Great Stuff turning bullish?
We’re close, dear reader. There’s just one caveat that concerns me: the potential infection fallout from this week’s nationwide protests.
But I’m hopeful that this situation won’t mean another economic shutdown later this year.
And, if we do see another shutdown, it could lead to the biggest buying opportunity since 2009.
This is why Great Stuff continues to recommend caution when investing in the current rally.
Not because I’m some permabear doubting the American spirit. I’m looking out for your best interests. The fire sale from a second COVID-19 market drop would be a massive opportunity.
If you’ve played it cautious up until then, you’ll have all the capital you’ll need to buy hand over fist.
Editor’s Note: From the HIV/AIDS epidemic in the ‘80s to SARS in ‘03, financial expert Jeff Yastine has covered important investment opportunities from lifesaving vaccines and emerging biotech stocks. COVID-19 is no different, and nowadays, you want someone who’s “been there, done that” with uncertain investing terrain.
Good: Freedom of Music
Speaking of buying opportunities, we have just such an occasion today. Warner Music Group Corp. (Nasdaq: WMG) officially returned to public trading with a fresh initial public offering (IPO).
The music industry behemoth was supposed to IPO yesterday, but it delayed that offering out of respect for national protests. Warner didn’t just sit on its laurels during that time, oh no. The company added an additional 7 million shares to its IPO for a total of 77 million shares.
What’s more, Warner priced those shares at $25 each, at the high end of its expected $23 to $26 per-share range.
An increased offering and higher price can mean only one thing: big demand.
And why wouldn’t there be big demand for WMG shares? Last year, the company earned $258 million on revenue of $4.48 billion. Furthermore, Warner hosts a stable of artists including Bruno Mars, Twenty One Pilots, Lizzo and Katy Perry … just to name a few.
This is one firework of an IPO you don’t want to miss out on.
Better: Bang, Zoom! To the Moon!
A while back, I noted that Zoom Video Communications Inc. (Nasdaq: ZM) “could become the de facto solution in videoconferencing, which should last long after the quarantines are over.” In fact, Zoom has the potential to become the next verb for videoconferencing … much like “Google” is now, or “Xerox” was way back in the day.
That prediction is playing out perfectly.
The company just reported blowout first-quarter earnings and solid second-quarter and full-year guidance. For the quarter, Zoom more than doubled Wall Street’s per-share earnings expectations, reporting a 169% surge in revenue.
In the wake of Zoom’s report, ZM shares received upgrades from RBC Capital Markets and D.A. Davidson Companies, which called Zoom’s earnings “one of the best quarters in software history.”
Best quarter in history? That’s a bit too much on the hype train for my liking. However, there’s no doubt that Zoom is establishing dominance in the videoconferencing market that will outlast the coronavirus pandemic.
Outside of the biotech sector, Zoom may be the biggest long-term winner to come out of 2020.
Well, save for this one other tech stock, you see…
Best: Strike Hard, Strike Fast
Congratulations, Great Stuff readers!
In less than five months, you’re sitting on gains of 79% with Great Stuff Pick CrowdStrike Holdings Inc. (Nasdaq: CRWD).
This morning, CrowdStrike unveiled a triple threat: It beat Wall Street’s expectations on first-quarter earnings, revenue and second-quarter guidance.
“With both security administrators and end-users working from home, we believe the rapid shift to a remote workforce has helped increase our leadership,” CEO and co-founder George Kurtz said. “We achieved 88% annual recurring revenue growth and 105% subscription customer growth year over year.”
One of the biggest feathers in CrowdStrike’s cap is its partnership with Amazon.com Inc.’s (Nasdaq: AMZN) Amazon Web Services (AWS). The company saw a 75% increase in annual recurring revenue directly related to its AWS partnership.
I expect this relationship to grow and CrowdStrike’s success with AWS to spawn new deals with other major corporations. This is just the tip of the iceberg for CRWD’s potential.
So, keep on holding CRWD, Great Stuff readers. We’re off to bigger and better gains!
Where there’s a Cardi Bee, there’s … IPO buzz?
Yes, I know better than to stick my head in the pop music beehive. And yes, I know you glazed right past those pop acts up in the Warner Music section up above.
Don’t worry, though: Bad Company, Blur, Cher, DEVO, Iron Butterfly, Skynyrd, Opeth, Rush … Warner has something for everyone, even if you stopped listening to new music post high school.
Anyway, with the WMG IPO in high demand, we’re talking about IPOs in this Poll of the Week. This is the most IPO hoopla I’ve seen in weeks, save for the always -entertaining “will they / won’t they” debate around Airbnb. (Forget couch surfing without your hazmat sleeping bags.)
So, have you ever invested in an IPO? Or do you avoid the “early bird” game? Vote below to let us know!
By the way, Paul — yes, the same Paul everyone knows and loves — has spent decades cracking the code of which IPOs end up skyrocketing … and which are destined for the trash heap.
Great Stuff: You Blabber, We Jabber
It’s that time again!
Tomorrow, we’re diving into a funky fresh edition of Reader Feedback. I want to reply to your email, see … but you haven’t written in just yet!
Let’s fix that this week, shall we?
Drop a line to GreatStuffToday@BanyanHill.com. Hit us with your comments or questions. Spill your secrets and salutations. Ramble about the state of the nation.
Until next time, stay Great!
Editor, Great Stuff