Category Archives: Growth Investing

Why This Growth Stock Went Up +10% on Monday

This first appeared in the Seeking Alpha Marketplace service DGI Across North America, from which you can get real-time buy and sell alerts (and explanations) when I make moves in my portfolio.

Summary

  • NetEase up 10.4% on Monday. My position is up nearly 17% in a little over 2 months.
  • News came out that it plans to buy ~$11 billion of inventory over the next 3 years from the U.S., Europe, and Japan to sell to the Chinese market.
  • NetEase is primarily a video game publisher in China that has been diversifying into e-commerce.
  • NetEase is reasonably valued after the pop based on the consensus low-end earnings growth estimation.
  • Interested investors can nibble here to start a position, but will be safer to buy on a meaningful dip — perhaps one will occur when the company reports Q3 results on Nov 15.

Occasionally, dividendfocused portfolios need some growth to spice things up. And NetEase Inc. (ADR) (NASDAQ:NTES) is a good candidate for consideration.

NetEase stock appreciated 10.4% on Monday. In the DGI Across North America service, I gave a real-time alert and the reasoning for buying NetEase, which is now up nearly 17% in a little over 2 months.

NetEase position November 2017

Source: Author

The following quotes are excerpts from my previous article that’s available in the service.

NetEase was founded in 1997 and has been listed on the NASDAQ since June 30, 2000. Even for an investment that was made at the end of 2007 would have delivered an annualized return of 32%!

This outperformed Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL) which has delivered an annualized return of 10.8% in the period, Baidu (ADR)(NASDAQ:BIDU): 19.6%, and even Amazon (NASDAQ:AMZN): 27.2%.

NetEase is the second-largest video game publisher in China.

In 2016, NetEase generated 73.3% of its revenue from its online games.

NetEase PC games Q2 2017

Source: Company Q2 2017 presentation – Slide 6

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Should You Buy Open Text Corp. for High Dividend Growth?

This first appeared as 1 of 3 top US dividend ideas for September 2017 in the Seeking Alpha Marketplace service DGI Across North America.

Open Text Corp. (TSX:OTEX)(NASDAQ:OTEX) is a mid-cap technology company, which has been growing by acquisitions in the expanding industry of enterprise information management. It is a global leader that offers software applications and cloud services in managing data.

Open Text strong long-term total returns

Source: August presentation (pdf)

Shares Experienced a Meaningful Dip

The stock has dipped about 15% on the Toronto Stock Exchange since April. This is partially because of a stronger Canadian dollar against the USD, as the company reports in USD. So, interested Canadian investors should take advantage of a stronger loonie and pick up some shares for technology exposure.

For U.S. or Canadian investors, the stock offers above-average growth (and dividend growth) at a low multiple. At ~US$32.30, it trades at a multiple of roughly 15 and a forward multiple of roughly 13, which is attractive for the analyst consensus’s estimated 3-5 year earnings per share growth rate of 19.7% for the company.

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Should You Buy Shopify Today?

Growth stocks shouldn’t be taken lightly. Just look at the Shopify Inc. [TSX:SHOP](NYSE:SHOP) stock to get an idea of what I mean. It has more than tripled in the last 12 months. You can’t argue against Shopify’s outperformance, except that it hasn’t turned a profit – yet. The company is expected to start making a profit as soon as late this year.

Shopping today is different from shopping 10 years ago. Nowadays, merchants may sell their products through their online store, their physical stores, marketplaces, social media, mobile apps, and other sales channels.

Shopify “provides (merchants) with a single view of their business and customers across all of their sales channels and enables them to manage products and inventory, process orders and payments, ship orders, build customer relationships, and leverage analytics and reporting from one integrated back office”. – 2016 annual report (pdf)

Rapid growth

Shopify’s growth strategies focus on growing its merchant base. At the end of 2016, Shopify had more than 377,500 merchants from roughly 175 countries using its platform with a strong focus in the United States. This suggests there’s much room for potential international growth in the future.

From 2013 to 2016, Shopify grew its revenue at a compound annual growth rate of 98%. This year, management expects to grow its revenue by 49-54% to $580-600 million.

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