For all of the challenges we’ve faced over the past couple of years, 2022 has real potential for increasing uncertainty. The Federal Reserve is hinting at interest rate hikes that could slow the performance of the stock market, and we are entering the new year with COVID-19 leading again thanks to a new variant.
Buying a large basket of companies might not be a favorable approach in the short term. On the contrary, careful stock selection could be the key to unlocking strong returns in 2022.
These two attractive stocks could energize your portfolio and might be worth buying right now.
Image source: Getty Images.
1. The case of Workiva
Earlier this year, the large consulting firm PricewaterhouseCoopers announced that 40,000 of its employees could work remotely on a permanent basis. Technology giant Lyft just told its employees that they can work from home until 2023. And the Wall Street firm Jeffries sent his Manhattan-based staff home after a COVID-19 outbreak at the office.
For some organizations it’s temporary, and for others it’s permanent, but the way we work is changing. This is why innovative technology companies like Workiva (NYSE: WK) are essential because they make change possible.
Workiva offers the ultimate data unification platform, bringing together information from a multitude of different applications in one place to simplify all kinds of reporting. If you are the manager of a remote team and this team works on platforms such as Selling power and Alphabetin Google Cloud, for example, tracking workflows can be difficult.
By aggregating data using Workiva, you gain greater visibility and are able to prepare critical reports such as Securities and Exchange Commission (SEC) filings – all in one place. The platform now supports over 350 different SEC forms, which is why 8 of the 10 largest banks in the world are using it.
In the last third quarter, Workiva raised its revenue forecast for 2021 to $ 439 million, which would represent a 24.8% growth from 2020. who spend $ 150,000 per year or more – increased by 41%.
Workiva’s top customers in terms of spend far outweigh others in growth, indicating that perhaps more large organizations are adopting work-from-home or hybrid models. It could play Workiva’s game in the New Year, especially if the pandemic resumes.
Image source: Getty Images.
2. The case of the GoPro
Go Pro (NASDAQ: GPRO) has flown under the radar for the past two years, but it hasn’t always been so. After going public in 2014, its stock quickly doubled to nearly $ 87 per share before declining until 2020, when it bottomed out at $ 2.29 per share. The company failed to generate significant growth as it struggled to expand beyond its one-dimensional action camera business.
But that has now changed. While GoPro is still the premier action camera hardware company – and innovating more than ever – it has recently grown into a very profitable subscription business. Its loyal customers can now unlock perks such as exclusive product discounts, unlimited cloud storage and live streaming directly from their GoPro device; all for just $ 49.99 per year.
In the recent third quarter, GoPro had 1.34 million paying subscribers, up from 501,000 the previous year for a 167% growth. Subscription revenue also more than doubled to $ 14.2 million for the quarter, but the best is yet to come. In 2022, the company estimates that it will generate $ 90 million in revenue from subscriptions alone, and since subscriptions have a gross margin of up to 80%, a large chunk of that could go to bottom line.
It’s not the only thing GoPro is doing to quickly improve profitability. Historically, the company has sold its cameras through some of the largest retailers in the world, but is now taking a direct-to-consumer approach, where it is able to keep a larger chunk of the profits. It facilitates this through the GoPro.com website, which now accounts for over 35% of all company sales.
GoPro’s stock is cheap by most measurements. The company is on track to generate $ 0.84 in earnings per share for 2021, and with a share price of $ 10.76, that’s a price-earnings multiple of 12.8. By comparison, the wide Nasdaq 100 The tech index is trading at a multiple of 34, so GoPro has a lot of leeway to catch up.
GoPro is a turnaround story worthy of recognition, and investors have the opportunity to step downstairs as the company embarks on a journey back to its former glory.
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Suzanne Frey, an executive at Alphabet, is a member of the board of directors of The Motley Fool. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool owns and recommends Alphabet (A-shares), Alphabet (C-shares), Jefferies Financial Group Inc., Salesforce.com and Workiva. The Motley Fool has a disclosure policy.
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