If you have some dry powder and are looking to invest in the stock market, the ongoing market volatility presents you with a great opportunity to build long-term wealth. Ideally, your equity portfolio should be well-diversified with a mix of growth, value, and dividend-paying stocks across sectors.
So, let’s see where you can invest $10,000 in May 2023.
A company that operates a cloud-based data platform, Datadog (NASDAQ:DDOG) continues to expand at a rapid pace. In the first quarter (Q1) of 2023, it reported sales of US$481.7 million — an increase of 33% year over year. Its operating income stood at US$86.4 million, while free cash flow was higher at US$116.3 million. Datadog ended Q1 with US$2 billion in cash, providing it with enough liquidity to pursue organic growth opportunities as well as expand via acquisitions.
The number of customers generating annual recurring revenue (ARR) rose 29% year over year in Q1 to 2,910, accounting for 85% of ARR. Further, the number of customers using six or more products rose to 19%, up from just 12% in the year-ago period, showcasing strong customer engagement rates.
Its dollar-based net retention rate stood at 130%, indicating existing customers increased spending by 30% on the Datadog platform in the last 12 months. Datadog’s remaining performance obligations grew 33% to US$1.14 billion, providing investors with near-term revenue visibility.
Down 62% from all-time highs, DDOG stock is trading at a discount of 28% to consensus price target estimates.
An energy infrastructure company, Enerflex (TSX:EFX), offers natural gas solutions across the value chain. Enerflex more than doubled its revenue to $825 million in Q1 of 2023. It also ended the March quarter with a gross margin of 19.5%, up from 16.6% in the year-ago period.
Its distributable cash flow stood at $55 million, which was used to fund the completion of large infrastructure projects. In addition to capital expenditures, Enerflex will also use cash flows to deleverage its balance sheet significantly by the end of 2023. Its net debt to EBITDA (earnings before interest, tax, depreciation, and amortization) ratio stood at 2.9 times in Q1, which is not too high.
Priced at eight times forward earnings, the TSX stock offers investors a dividend yield of 1.2%. It’s also trading at a discount of 68% to consensus price target estimates.
Waste Connections stock
The final stock on my list is Waste Connections (TSX:WCN), which is valued at a market cap of $49 billion. An integrated solid waste services company, Waste Connections provides collection, transfer, and disposal of non-hazardous waste.
It serves over eight million residential, commercial, and industrial customers in Canada and the United States. Additionally, it also offers oil waste treatment, recovery, and disposal services in multiple regions south of the border. Waste Connections is the third-largest solid waste company in North America.
Part of a recession-resistant sector, WCN stock is up 502% in the last 10 years, easily outpacing the broader markets. Despite a challenging macro environment, Waste Connections is forecast to increase adjusted earnings at an annual rate of 13.4% annually in the next five years.
With $17 billion in assets, the company forecasts to end 2023 with revenue of $8.05 billion, adjusted EBITDA of $2.5 billion, and free cash flow of $1.22 billion.