There are several high-growth technology firms now available at favorable valuations. It’s difficult to predict when the IT industry will recover, but long-term investors can disregard this short-term noise and focus on the fundamentals of these businesses.
Here are two high-tech growth stocks with tremendous potential that traders should consider investing in today.
1. SoFi Technologies
SoFi Technologies (SOFI 0.00%) is down 55% since the beginning of the year, so you may think it’s having a tough time. However, this isn’t the case. In Q1, SoFi’s adjusted revenue rose 49% annually to $321.7 million, and its adjusted EBITDA increased 110 percent to $8.7 million, continuing a trend of seven consecutive quarters in which the metric has ended in the green. The company’s adjusted EBITDA margin of 3% also surpassed management’s guidance range of 0 percent to 2%.
SoFi’s fintech platform grew by 408,000 new members in the first quarter, increasing 70% year over year to 3.9 million users. SoFi launched 689,000 new items in the same period, which represents a growth of 84% compared with the same quarter last year.
Even after the continuing growth of the moratorium on student loans, which is now scheduled to expire in August, the fintech firm is making progress. Despite present headwinds, management increased guidance for the full 2022 financial year. As a result, analysts anticipate SoFi’s top line to reach $1.5 billion next year, up from $1 billion this year, and its EPS to decline by $0.44 against positive earnings of $0.69 in this year’s numbers (EPS).
SoFi’s greatest drawback is its lack of profitability, but because of its continuous gains and low price-to-sales ratio of 4.5, daring investors should gamble on this stock right now.
UiPath (PATH 5.21 percent) employs software robots to automate daily office activities, and despite its success, the stock has tumbled 62% this year. On June 1, UiPath announced a Q1 top line of $245.1 million, up 32% year over year and ahead of the negative $0.03 adjusted earnings estimate. The company’s GAAP gross margin of 82% also topped last quarter’s 74%, which was better than the same period in 2017 when it was 74%.
The firm’s yearly run-rate on renewals, which is vital to software as a service (SaaS) businesses with subscription contracts, increased 50% to $977.1 million. As a result of the excellent start in the first quarter, management boosted expectations for the whole year. The organization now expects revenue to be between $1.085 billion and $1.090 billion throughout the entire fiscal year, implying roughly 22% growth year over year if UiPath can achieve the higher threshold.
Despite the fact that UiPath’s solid performance has lifted its share price, it still trades at less than 10 times sales. This does not make the stock cheap, but its price-to-sales ratio is currently 2.5 times lower than it was at the start of the year. Given that it is a secular growth sector that it participates in, investors should anticipate to pay a greater price. Despite maintaining strong expansion, it has dropped over 50%, suggesting that UiPath might be worth considering right now.