It's been a surprisingly good year for most growth stock investors. Despite a pandemic, recession, and general market fatigue, we've seen more than 200 major exchange-listed stocks more than double in 2020.
Some of them could be working on an encore as we head into the final three months of the year. Peloton Interactive (NASDAQ:PTON), Datadog (NASDAQ:DDOG), and JD.com (NASDAQ:JD) have gained more than 100% through the first nine months of 2020. Let's go over why they have the catalysts to double again through the final three months of the year.
Image source: Getty Images.
Peloton
It's easy to dismiss Peloton as a pandemic play, but it's not fair or accurate. The company behind the high-end stationary bikes and treadmills may have just put up an insane 172% top-line surge in its latest quarter, but it was growing its reach even before the COVID-19 crisis. Revenue more than doubled in fiscal 2019 after soaring 99% the year before.
The popularity will also not fade once we're past the coronavirus disruption. Folks don't spring four figures for workout equipment only to walk away. Peloton now has 1.09 million subscribers paying $39 a month to connect to its fitness platform; the company expects to top 2 million subs a year from now.
The new normal may have created an environment that's conducive to Peloton's growth. Churn is at a four-year low, and the number of monthly workouts per connected fitness subscribers has never been higher. Gyms and spinning classes are starting to reopen, but we're not seeing Peloton lose traction. It's also broadening its product line at market-widening price points.
Datadog
Some of this year's biggest winners are cloud-based enterprise platforms that make businesses more efficient, like Datadog. Its offerings help companies do everything from monitor uptime to improve visitor experience through next-gen analytics.
Datadog's popularity is undeniable. Revenue surged 68% in its latest quarter, as its client count increased by 37% and the average existing customer spent 30% more than a year earlier. This isn't a fluke. Datadog's growth rate was actually higher in the past, and its dollar-based net retention rate has clocked in at 130% or higher for a dozen straight quarters.
Datadog is expanding its product offerings, and more of its customers are signing up for multiple platforms. Datadog has also routinely boosted its guidance, including coming through with another "beat and raise" in August. Momentum is on its side after weathering the COVID-19 storm, and the near future is ripe with opportunities for its expanding addressable market.
JD.com
China's largest online retailer in terms of revenue is booming again. The world's most populous nation is seeing the same online migration that we're experiencing here during the COVID-19 crisis. The trend has continued even though China is seemingly past the pandemic, given that its case counts peaked back in February.
JD.com's net revenue rose 25% last year. It retreated to 21% during the first quarter of this year before bouncing back with a 34% rebound in its latest quarter. JD.com isn't a household name to most stateside investors, but it's a juggernaut with 417.4 million active customer accounts and $22.7 billion in trailing free cash flow.
There are naturally some big risks when it comes to investing in Chinese stocks, but with so much momentum on its side, JD.com is worth it right now. It joins Peloton and Datadog among this year's biggest winners with the best chances of doubling again in the fourth quarter.
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September 30, 2020 at 07:10PM
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