Top 8 Stocks To BUY NOW (High Growth Stocks) transcript

these are eight stocks that I actually own in my Charles Schwab stock portfolio and in this video I'm going to be showing you all of them they represent the companies that I think have the best chance of having a very positive return going forward and if we open up my actual stock account I like to be transparent on this channel we can see that year to date my portfolio is up around 14 000 or 13 or is it actually down eight percent over the last six months or maybe it's up 15 over the last three months or maybe it's down six percent over the last one month the stock market has been an absolute roller coaster over the last six months especially for tech stocks like I invest in but in this video I'll be walking through eight High conviction positions that I'm investing in and explaining exactly why I own those companies and remember I'm putting all my personal money behind these stocks so I'm actually putting my money where my mouth is and stick around until the end of the video to see which trades I've made in the past month so let's start by looking at my first and largest stock position overall which is datadog I currently own 330 shares of datadog at a market value of just under twenty four thousand dollars and that's down off cost basis of thirty two thousand dollars so in total it's lost around eight and a half thousand dollars overall and you can see that Charles Schwab is giving this stock an F rating now that rating doesn't actually have to do with how much datadog is down so far or how far it's going to continue to drop as far as I can tell Charles Schwab does sort of a value-based analysis of these companies to give them the rating and so it doesn't work well for high growth companies for example I used to invest in a company called crowdstrike where I made a 300 return over around a year and a half and it had an F or D rating with Charles Schwab that entire time so I don't put too much stock in those numbers but here's why I'm actually investing in datadog so datadog is a data company the United companies applications security and infrastructure all through a single pane of glass basically as companies generate more and more data datadog benefits from them and we can see that by looking at their actual numbers if we look at their revenue from a year ago they're growing at 83 per year then they grow at 74 then 61 then 44 now even though this rate of Revenue growth is dropping it's still extremely high for a company that's making near nearly two billion dollars in Revenue per year and while the company is not technically profitable according to Gap Accounting Standards if we look a little bit beneath the surface they have a very positive adjusted free cash flow meaning they're throwing off basically a hundred million dollars in cash every single quarter and they have very high adjusted gross margins sitting at around 81 percent in Q4 2022. while this company May face some temporary headwinds as we see a downturn in the stock market over the next several months in the long term the general trends of cloud growth and data proliferation are going to benefit datadel plus they operate in the B2B space meaning they sell their products to other businesses rather than consumers which tend to be a little bit less fickle about canceling contracts even in an economic downturn and hey by the way welcome to fintech if you find anything valuable in this video please just let me know in the comments and I'll try to respond to all of that and I know some people are probably going to say oh this is the same portfolio that you showed last month and the month before that and you know what that is true but I also think that if your portfolio is changing every single month you're probably probably doing something wrong I think Warren Buffett said something like that but make sure you watch until the end and I will show you what new trades I made in the past month so my second largest stock position overall is in a company called snowflake which I own 160 shares of at a value of 22 and a half thousand dollars this one is also dipped over the last few months down from around twenty nine thousand dollars down seven thousand dollars since then now snowflake also operates in the data space like datadog but it works in a very different way one analogy that I've used before is the change from Old School handwritten data that's taken in basically a piece of paper on a note sheet and how that eventually moved over into basic computers almost like Excel spreadsheets then that turned into more advanced databases than data warehouses then the cloud but snowflake is taking that one step further snowflake has invented the data Cloud which lets them manage all the data access collaboration monetization and even building tools that other companies can use to actually run useful applications on their data this makes it an order of magnitude less effort for other companies to use the data that they're generating and so they're paying snowflake less than they're getting back by using the data now that's all a nice story but let's look at snowflakes numbers snowflake like datadog if we look at their most recent quarters is not profitable in fact they're running a negative net profit margin of 35 percent but also similar to datadog they're throwing off an incredible amount of cash they're producing 65 million dollars in free cash flow every quarter now I'm not going to say that profits aren't important but in a lot of cases especially in an economic downturn cash is actually even more important they're also running adjusted gross margins of 75 percent meaning that the core business is actually making money they just have to make enough money to offset all the costs that they have from their engineering department mostly but most important with snowflake is their customers absolutely love their product they have a dollar based net expansion rate of 165 percent this means that for every dollar a customer spends this year they can expect that same customer to spend 1.65 cents next year that means that even if snowflake didn't Market outside the company at all they would effectively grow at at 65 percent year over year just from their existing customers and if we look at their revenue over time we can see how this growth rate is happening a year ago they had Revenue 422 million dollars up 84 year over year then they had 82 growth the next quarter then they had 66 growth the next quarter and in their most recent quarter they had 55 growth while making almost 600 million dollars in Revenue now obviously as the company gets bigger and bigger that percentage growth is going to decline over time but their absolute growth rate is still incredibly High and a lot of that has to do with the fact that the customers just really like their product which is why that's my second largest position that I invest in but speaking of investing it's important to make sure that your online trades are secure and this video sponsor expressvpn can help you do that sending data like your stock trades over an unencrypted internet connection is kind of like mailing a postcard without an envelope the mailman can see it and so can anyone else who's nosy enough to take a look and whenever you're connected to an unencrypted internet connection on your phone your computer or even your TV you're sending out data into the world that could be intercepted by someone before it gets to its intended destination but if you use a VPN it creates a secure tunnel to your destination it's kind of like putting an envelope around your postcard before you send it out in the mail so no one else can read your message and by using the link in the description expressvpn can help you start protecting your data today did you know that many isps which are the companies that give you internet can legally sell your data to advertising companies well expressvpn stops this by rerouting 100 of your network traffic through their secure encrypted servers expressvpn also masks your unique IP address making it much harder for a big Tech and advertisers to track you across the internet but that's not all a VPN does I personally signed up for expressvpn for a completely different reason because did you know that you can actually watch shows that aren't available in your region by using a VPN many companies like Netflix only offer content in certain regions like say the UK but with expressvpn I can set my region to wherever I want and watch shows as if I'm sitting in the middle of London now I just just need another season of Sherlock to come out and if you sign up using the link in the description today you'll get three free months with expressvpn so check that out by going to the link in the description now now the third largest company that I'm investing in is cloudflare which I own 317 shares of at a value of 18 000 and this one's down only a little bit from around twenty thousand dollars overall and even though this shows this is a loss this is partly due to how Charles Schwab calculates their gains and loss because I actually sold some of my cloudflare when it was at a higher price and then bought more around that same price it raised the cost basis that cloudflare is calculating it basically uses a first in first out formula so even though I've actually made quite a bit of money on cloudflare this is calculating my loss based on those more expensive shares that I bought more recently but why am I investing in cloudflare in the first place well cloudflare is one of the more interesting companies on this list and that their goal is to make the internet itself work better I won't go into all the products that cloudflare offers because honestly I could make an entire Channel just dedicated to cloudflare but I would consider them probably the most in Innovative company on this list they offer products ranging from website security to improving website performance to actually offering platforms that developers can build on top of if you know anything about Cloud development they're basically starting to compete with companies like Amazon Microsoft and Google with their Cloud systems which would be almost unheard of for a relatively small company to do five years ago now one of the reasons cloudflare has managed to do that is because they are growing extremely consistently they've grown at over 50 percent Revenue year over year for more than the past half decade similar to the other companies on this list cloudflare is not yet profitable from a gap profit margin perspective they are getting closer and closer to becoming profitable every single quarter and in their most recent quarter they reported positive free cash flow for the first time of 34 million dollars and I consider that a very good thing as we enter a potential recession that cache gives them the ability to make choices if they need to buy a competitor they can do that if they need to cover a shortfall in one quarter's earnings because there's a sudden downturn they can do that again while profitability is important to investors what matters most to companies is cash flow and the ability to keep on growing I would much rather a company continue to invest in growth and taking over a market than to start taking profits too early and completely cut off all that growth allowing a competitor to come up catch them and then pass them this is basically the exact strategy that Amazon took for around 20 years when they didn't turn a profit until they were already a multi-billion dollar a year company number four on my list is Sofi which I currently own 1900 shares of at a value of twelve thousand dollars and this one's actually up a little bit up from a cost basis of twelve thousand dollars overall now sofa is an interesting company because of all the turmoil that's been happening in the banking industry recently so far plans to be the future of banking basically focusing on Millennials and gen Z who make far above the average income to focus on them as customers now a lot of people might know Sofi from their financial services things like the sofa invest app but that's actually just a microscopic portion of selfies business the vast majority of their business comes from their lending segment so if I basically uses their financial services is to capture interest and bring in new customers and then they funnel those customers into the more valuable areas of the company where they actually make their money this creates sort of a feedback loop where you get a customer on board and then you can cycle them on to more and more valuable parts of the company over time and as long as you provide them a good experience with each product they're more likely to use more of your products over time now you can probably guess the name of the game here sofa is not yet profitable but they are growing extremely quickly with Revenue growth of 57 percent in their most recent quarter growing 51 before that 52 before that and 62 percent a year ago now so far is a little different from the other companies on this list and that their mix of both Tech and banking now the banking side carries its own set of risks that are completely independent from the tech side economic downturns can really affect how much cash they have on hand and lending plays a big role in their business because of that I don't have as much confident forecasting Sofi in the short term but over a longer time period let's say five to ten years I have a lot of faith in Sofi as a company which is why this is my fourth largest position next we have my fifth largest position overall which is a company you probably haven't heard of called z-scaler I currently own 82 shares of z-scaler at a value of nine and a half thousand dollars and this one's actually down pretty substantially down from around nineteen thousand dollars overall so it's down almost 10 grand with a pretty substantial portion of that drop happening in just the last month they're down almost 16 percent now zscaler offers a security product called zero trust security if you think of old school security it basically works like a wall and a moat you build a firewall around your network and you keep all the bad guys out it's almost like protecting a castle the problem is if a bad guy can get over that wall and into your network they have free reign to mess up everything inside that Walled Garden but with zero trust security every application computer and person on the network has to authenticate any time they're talking to anybody else this makes the network much more secure and it makes a lot more sense in a cloud-based Paradigm when a lot of time your applications are running on servers that could be spread across the entire world zscaler is the leader in zero trust security and as more and more companies are moving to the cloud allowed more of them are going to be implementing this kind of security Now z-scaler is not Gap profitable but they do have very positive adjusted gross margin at 81 percent and they are producing substantial free cash flow the biggest downside with zscaler and why it's not one of my largest positions overall is the fact that their growth has been slowing down from 71 percent Billings growth year over year in 2021 to 37 Billings growth in q1 2023 and since z-scalers Billings tend to predict where their revenue is going to go we may soon see a drop in z-scaler's Revenue year over year as well that being said there are still good signs with this company like the fact that they're making more free cash flow than ever they're having strong adjusted gross margins that are maintained high and their stock based compensation as a percentage of Revenue has continued to drop over time which means that eventually they may even become Gap profitable next up on our list we have two companies that offer very similar products and so I'm going to talk about them at the same time those are Sentinel one and crowdstrike Sentinel one I own 582 shares of at a value of just under 9000 dollars and crowdstrike I own 55 shares of at a value of just under seven thousand dollars now crowdstrike I've bought in sold out of a couple of times over the past several years but right now this is the size position that I'm comfortable with in this company now interestingly Sentinel one is down pretty substantially for my initial investment down around 33 so I've lost nine thousand dollars in it and crowdstrike is actually up over around the same time period up nearly a thousand dollars now both of these companies offer basically super Advanced antivirus software for Enterprises they use AI to analyze different viruses and threats so that they can proactively predict where the next threat will come from instead of Simply creating a database of past attacks and then trying to recognize those attackers and prevent them from attacking again they can proactively prevent future attacks crowdstrike for example made a name for itself when they successfully detected and mitigated the solar winds breached with their customers that breach if you don't know was one of the largest security breaches in history with more than eighteen thousand customers whose installed malicious Updates this included companies like Deloitte Microsoft Cisco and included government agencies like Homeland Security State Commerce and the treasury but guess whose customers weren't affected by this crowd strikes now crowdstrike and Sentinel 1 are also cloud-based security providers meaning that as customers move to the cloud these are the kinds of software tools that they're going to be looking for crowdstrike is kind of like a more mature version of Sentinel one right now crowdstrike makes 637 million dollars in Revenue each quarter and it's growing at under 50 year over year while Sentinel one is making a much smaller 121 million dollars per quarter but growing at a much faster 92 percent year-over-year in a lot of ways Sentinel one looks exactly like crowdstrike did several years ago which coincidentally is when I was investing in crowdstrike and made the biggest 300 return that I've had in a single stock now right now I'm okay with owning both of these companies because I think security and cloud-based security especially are growing trends that are going to benefit multiple winners and I like owning crowdstrike as sort of the big elephant in the room in the security space as well as Central one who's the up and coming super fast grower who has a lot of potential so okay we just covered three security stocks so now let's go to a totally different area probably to an area you've never even thought about before have you ever heard of back office Financial automation for smbs probably not because it sounds super boring and it kind of is which is what makes it such a great investment my last and smallest position is not a flashy company it's not super sexy it's not in a very interesting industry but it's called build.com I own 74 shares of bill.com at a value of five and a half thousand dollars and while this company is down over 50 percent down six and a half thousand dollars overall I have a lot of confidence in it going forward bill.com is unique in that it's not targeting big Enterprises like a lot of these other companies on here instead it's trying to sell its services to small startups and businesses that maybe only have one or two employees those companies manage their entire businesses using physical papers and Excel spreadsheets or Google Sheets they're not super sophisticated and so any Improvement can make a big difference in their business bill.com helps automate and profess nationalize a lot of those basic Services taking them from Excel spreadsheets and into a software suite that they can grow into now that on its own is a very valuable service but what's even more valuable is the fact that bill.com identifies all of these small startups when they're still small gathers a bunch of data from them including who they're paying money to and who's paying money to them and is able to create a network of other companies that they can then Market to now are they profitable you can probably guess no they have a net profit margin of negative 35 percent if you use Gap accounting but they are growing like crazy growing 66 percent year over year in terms of their revenue in their most recent quarter growing 94 before that growing 155 recorded before that and growing nearly 180 percent the quarter before that now one of the reasons those Revenue growth numbers are so crazy is because bill.com has been acquiring a lot of other companies as well which skews the revenue number temporarily in certain quarters but if you look at the organic year-over-year Revenue growth rate they still grew 49 in their most recent quarter bill.com is also produced using positive free cash flow and so even though they are not Gap profitable in the short term they do still have some cash to work with now I should distinguish here between Gap profitability and non-gaap profitability some of these companies are non-gaap profitable which means they're profitable if you exclude stock based compensation this is how they pay employees especially high paid engineers and Executives where they're not actually giving them cash they're just awarding them in stock this is a good thing for small companies because it doesn't affect their operations but it does weigh down on their stock price overall Gap profitability means that they are profitable even if you subtract out the stock based compensation and so it's much harder to achieve for a small fast-growing company for a company that's growing quickly I would much rather them pay their employees in stock based compensation instead of pulling money out of the business because that's going to be a bottleneck that holds them back but you don't want their stock based compensation to get too far out of hand you don't want them to just be paying people just because and so that's where Gap profitability can have a place as well I just wanted to explain that because I know I've seen a lot of comments around how none of these companies are Prof affordable but I want to be clear that that is a very vague term and can have different meanings in different contexts now I also promised at the end of this video I would let you know what trades I made in the past month so I only made one trade in this month and that was buying a mix of large cap and mid cap stocks using vffsx which tracks the S P 500 and vmcpx which tracks mid cap stocks I put three thousand dollars into both of those two index funds just like I do every single month in fact this is where the majority of my money goes into every month it's not as flashy as investing in individual stocks and it's not as interesting but that is the basis for how I plan to build wealth in the long term but let me know if you own any of the stocks I talked about or if your portfolio has done better than mine over the past year let me know what stocks you've been investing in to do that on this video if you leave a comment I will try to respond to all of them there are going to be some bots in the comments so I'll try to get those deleted as well don't forget to like And subscribe maybe check out expressvpn using the link in the description and I'll see you next time