Company Coverage

Signal: Hold

Price Target: $575

The company’s SAAS model is firing on all cylinders, they are the go to provider for all media creation software which is forecasted to continue to grow. Investors are paying 18.65 current price to sales or 15.70 forward price to sales  which is lower than many comparable companies. Our view is that Adobe is a great lower risk play in the current market.

Signal: Hold

Price Target: $234

Autodesk has done a great job transitioning their industrial design software to a SAAS model. With 16% revenue growth and 90% gross margins the shares have rallied from $125 to a 52-week high of $321 and a current share prices of $260. Our DCF valuation came in at $234 per share indicating that the shares are fully valued at this point. The big potential upside for the stock is increased use of Autodesk software for 3D printing, but they face strong competition from Solidworks which has historically has been utilized more for 3D CAD applications. Long-term investors should do great holding Autodesk shares but we are recommend waiting for a pullback before putting new capital to work.

Signal: Buy

Price Target: $309

Salesforce stock had a nice rally after their August 2020 quarterly results blew past expectations, the stock has since sold off from a 52-week high of $284.50 due to the announced acquisition of Slack. Salesforce has a great executive management team that has a strong track record for integrating acquisitions into their product offering. We view the Slack purchase as a positive for the company, the negative press around Slack compared to the main competitor Microsoft teams is overdone as the Slack product offering as superior and Microsoft has inflated their adoption numbers converting users over from Skype for business. Acquisition aside, Salesforce is consistently ranked as one of the best places to work coupled with their mission to use business as a platform for change, we view this as a positive way to retain talent in an increasingly competitive market. They are the dominate player in the CRM category, with a 20% revenue growth rate and 7.5x EV/EBITDA shares are undervalued with our price target of $309 using a conservative long-term growth rate of 10%, any further pullback in the share price is a buying opportunity. 

Signal: Buy

Price Target: $675

Nvidia has seen incredible sales growth over the past couple of years and we believe this trend will continue, with growing demand from gaming, crypto mining, datacenters and other GPU dependent tasks. The recent demand for GPUs has seen the recent launch of the 30 series graphics cards sell out instantly and customers having to join long wait lists before they can receive the products. We view the recently announced ARM acquisition as unlikely to go through due to antitrust regulation but if the transaction is approved Nvidia could easily become the markets next trillion dollar market cap company in the coming years. Even without the ARM acquisition the tailwinds for the company are very strong and investors should be rewarded for holding the shares over the long-term. 

Signal: Buy

Price Target: $130

AMD has seen incredible performance under CEO Lisa Su, they are currently the market leader in consumer and professional desktop processors and we believe they are a number of years ahead of their main competitor Intel. AMD should be able to maintain this position for some time as they are currently using a  7nm manufacturing process and the 2022 Zen 4 launch is expected to move to 5nm manufacturing while Intel is still on 14nm. The company’s recently released Radeon RX 6000 series graphics cards has received strong reviews and have drastically closed the performance gap to Nvidia product offerings. We see them continuing improving the performance of the GPU product lines and with global GPU demand at an all time high any products they launch should continue to sell out. Lastly we see the market not pricing in any upside with the recently announced Xilinx acquisition which should offer investors substantial upside. 

Signal: Speculative Hold

Price Target: $240

Teladoc has been one of the most exciting stocks to follow, as they have been one of the biggest beneficiaries of the global pandemic offering virtual health services to customers resulting in 100% revenue growth from 2019 to 2020. The company’s service offerings are impressive with 24/7/365 service, 450 medical specialists serving over 50 million members. Furthermore really like the diverse customer base which include global companies, hospitals, health plans and insurers. The healthcare sector is prime for disruption and a strong vote of confidence has been on give to Teladoc with ARC Invest making Teladoc their second largest holding across all of their funds. The big question we have is what will be the future growth rate of the company. In our valuation we used a 50% average revenue growth rate over 5 years giving us a price target of $240. This grow rate could easily be surpassed hence our speculative hold signal but investors should be patient jumping into the stock with the current interest rate environment and inflation fears, if investors are comfortable with this level of risk positions should be initialed on down days.

Signal: Speculative Buy

Price Target: $82

Coupang dubbed the “Amazon” of South Korea is one of the fastest growing e-commerce companies, recently going public with shares initially offered at $35, they traded as high as $67 before pulling back to the mid $40 range. The company has had impressive performance with revenues growing 97% from 2019 to 2020. We assumed a conservative 5 year average growth rate of 35% in our valuation which the company should easily exceed. The company has over 100 fulfillment centres across the country resulting in 70% of the population living within 7 miles of a logistics center. This allows Coupang to offer the “Dawn Delivery”, customers can place orders before midnight and items will be delivered before 7am the following day. Management has recently stated that they are focused on being discipline focusing on maintaining margins while growing the company. We believe there is long-term fundamental value in Coupang shares and investors can initiate a position at these levels in the speculative allocations of their portfolios. With the recent interest rate environment and insider lock-ups expiring in the coming months there may be opportunity to pick shares closer to the initial $35 IPO price.

Signal: Speculative Buy

Price Target: $436

Coinbase, the largest global cryptocurrency exchange had its highly publicized IPO with shares initially rising to $429 and subsequently pulling back to $282 per share. Coinbase brings rare profitability to an IPO with revenue growing 153% from 2019 to 2020 and generating impressive 89% gross margins. The Coinbase platform has 56 million users with $223 billion in assets and $335 billion in quarterly volume traded. We view Coinbase as a great way for investors to participate in the cryptocurrency boom without owning the underlying. That being said investors should expect plenty of short-term volatility in the shares but arguably less than outright owning specific cryptocurrencies. There is plenty of long-term upside with total global cryptocurrencies reaching $2 trillion dollars in market capitalization with the largest being Bitcoin comprising $1 trillion of that. As the company mentioned in their Q1 2021 conference call to investors they believe the total addressable market for Coinbase being anyone with a smart phone who has the desire to utilize crpytocurrencies. This could very well be early days for the company and a great long-term bet for those that can handle the short-term risks and volatility with the underlying currencies still being developed and proved out in the market.