The three technology stocks that I will look at below are constantly beating expectations and have strong long-term growth potential, but that potential seems to be underestimated by the market. It’s time to buy some shares of these companies before the market fully recognizes their potential.
Kinaxis Inc. (TSX:KXS)
Kinaxis is a provider of cloud-based software for supply-chain operations. The company was founded in 1984 and went public in 2014. Kinaxis has been providing real-time supply-management software to the electronics industry for a long time, but it has expanded recently in the healthcare and automotive sectors.
In May, Kinaxis introduced a self-healing supply chain powered by machine learning to help improve supply-chain performance.
In its first quarter, the company revenue increased 10% to $35.9 million as compared to the same quarter in 2017. Kinaxis reported 24% growth in subscription revenue to $29.5 million, and adjusted EBITDA up 8% to $9.2 million (26% of revenue).
The company reported adjusted EPS of $0.29 for the quarter, beating analysts’ estimates of by $0.05.
Kinaxis’s earnings are expected to grow by 37% next year.
Shares are up 15% since the beginning of the year.
Shopify is an electronic platform that allows customers to create their own online shop. The company, based in Ottawa, was founded in 2004 and went public in 2015, growing fast since then.
Shopify reported a strong revenue’s growth in its first quarter — it was up 68% to US$214.3 million from a year earlier. Subscription solutions revenue increased 61% to US$100.2 million, driven by an increase in the number of merchants joining the Shopify platform.
Net loss for the first quarter of 2018 was US$15.9 million (US$0.16 per share) compared with a net loss of US$13.6 million (US$0.15 per share) for the first quarter of 2017.
Adjusted EPS was US$0.04 compared to a loss of US$0.04 a year ago, beating analysts’ expectations of a loss of US$0.05 per share.
Shopify incurred a loss in its latest quarter, because it is investing in many new innovative products. For instance, the company is developing a debit and credit card tap reader for customers with physical stores and a message app that uses artificial intelligence (AI) to help entrepreneurs automate parts of their business and interact with their customers.
The e-commerce company will also open its first physical store later this year for merchants who would need on-hand business support.
Shopify’s earnings are expected to grow by 239% next year.
Shares are up 58% since the beginning of the year.
Amazon.com, Inc. (NASDAQ:AMZN)
Amazon is an American electronic commerce and cloud computing company that was founded in 1994 and went public in 1997. Over the years, Amazon has become an online retail giant, and its stock is now trading for over $1,700 per share. Fast growth is still in the cards for the company, which keeps beating expectations.
The Seattle-based company reported a huge earnings beat in its 2018 first quarter. Amazon reported EPS of US$3.27 for the quarter, beating analysts’ estimates by US$1.47. EPS was US$1.48 in the first quarter of 2017.
Net income more than doubled to US$1.6 billion. Revenue was US$51.04 billion for the quarter — up 43% as compared to the same quarter a year ago.
The growth driver for Amazon was its cloud computing unit, Amazon Web Services (AWS), which reported revenue of US$5.44 billion — up 49% as compared to a year ago.
Amazon’s earnings are expected to grow by 60% next year.
Shares are up 45% since the beginning of the year.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Stephanie Bedard-Chateauneuf has no position in any of the stocks mentioned. David Gardner owns shares of Amazon. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of Amazon, Shopify, and SHOPIFY INC. Kinaxis and Shopify are recommendations of Stock Advisor Canada.