AI applications are anticipated to increase and get lots of attention. If you want to get in on the profits, here are three stocks worth looking into during April:
1. Alphabet
Google-parent Alphabet fared well in 2020, which shares only being down by 5% from all-time record highs. The company has incredible long-term potential as its cloud computing and digital ads business keeps expanding. Given this, and the fact that the stock is selling for only 35 times trailing 12-month cash flow, the stock is hovering in value territory.
Google itself uses AI internally, from its search to its subsidiaries like AV subsidiary Waymo. But Google is also aiding customers in making use of AI. This is especially obvious in its fast-growing Google Cloud sector, where a range of cloud services enhanced with AI can be used to help businesses with a host of operations and infrastructure processes.
With it’s sales growing by double-digit percentages, it is very profitable, and it’s trading for a good price. Buy it now.
2. Invitae
Invitae has been almost halved from its all-time high. But share prices are still over double where they were at the start of 2020.
However, selling for around 16 times trailing 12-month sales, Invitae might be a great long-term bargain. The company’s range of genetic testing possibilities is aiding all kinds of preventative and predictive medicine. And their recent purchase of Archer DX gives them cancer treatment and testing abilities.
The potential is huge. So where does AI fit in? Analyzing genetic code is very complex, but AI software is helping the process.
Invitae is not profitable yet — cash flow was negative $321 million last year with revenue being $280 million due — but it is on the path to breaking even within the next few years. The company could be in for a huge jump in financial results this spring as it gets past the lockdown. I’m looking at an initial purchase of this next-gen healthcare company at these prices.
3. Medallia
Medallia records and gathers data on digital experiences and uses AI to aid businesses in deciding how to improve. And even though last year was so-so, revenue still increased 19% to $477 million. The company expects more growth over the next one year too. But shares have been hit recently, as the outlook for the first quarter of 2021 indicated a y/y growth of just 12% to 14%.
Investors don’t see the long-term possibilities here. The stock price is lower by 17% so far this year, but shares look like a bargain at only 8 times trailing 12-month revenue. The company also used some of its cash to buy analytics company Decibel for $160 million. They believe this will make their platform for improving digital interactions even better as companies update their operations for a new online age.
I expect this cloud stock to stay volatile, but the company is still growing and Medallia is certainly among my buy list.
Author: Steven Sinclaire
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