Stock Hotlist for the Week of March 15th

Stocks rose last week, with both the Dow Jones Industrial Average and the S&P 500 achieving record highs thanks to progress on COVID-19 vaccine distribution and the passage of an aggressive economic stimulus package.

There could be more bumps in the road, but for the most part the Wall Street pros are optimistic.  With that in mind, the big winners of 2020 may have run out of steam for now, but there are still winning stock picks with plenty of runway left in 2021.  Our research team put together this list of 3 stocks to watch next week.  

Investors are eagerly awaiting the latest earnings update from Five Below (FIVE), scheduled for Wednesday afternoon.  Notably, this extreme-value retailer for tweens and teens has a trailing four-quarter earnings surprise of 46.9%, on average. In the last reported quarter, this Philadelphia, PA-based company’s bottom line surpassed the consensus estimate by a significant margin of 89.5%.

  Its mid-January update revealed that sales jumped 10% at existing locations in November and December.  That revenue spike rose to 21% after including the growth in its store footprint. “We are very pleased with our holiday sales performance,” CEO Joel Anderson said in a press release.

Anderson said at the time that the full quarter’s sales should rise by roughly 22%, which is right where Wall Street is expecting revenue to land this week.  But Wednesday’s report will also include key metrics like profitability, inventory levels, and cash flow. 

Five Below’s fourth-quarter performance is likely to have benefited from the company’s digital strategy, expansion of supply chain network, enhancement of overall distribution capabilities and focus on merchandise assortment.  The company has been adding more essential households and wellness products at compelling prices.

Assuming no nasty surprises in these areas, Five Below is likely to enter a new fiscal year with cash resources and plenty of momentum it can build on as it expands its store footprint yet again in 2021.

The beauty of cybersecurity stocks is that they’ve transformed into a basic-need service for businesses of all sizes. No matter how well or poorly the U.S. economy is performing, hackers and robots seeking to steal enterprise and customer data don’t take a day off.  As time passes, the onus of providing network and cloud protection is likely to fall onto third-party providers like CrowdStrike (CRWD).

What makes CrowdStrike so special is the company’s cloud-native Falcon platform.    Having been built in the cloud, Falcon is able to respond to threats faster than on-premise solutions, and in many instances, at a lower cost. It’s also a platform that leans on artificial intelligence to grow smarter over time.  Each week, Falcon oversees more than 3 trillion events, so its ability to respond to threats is evolving and quickening over time.

The company’s operating results demonstrate, unequivocally, that its clients like the product.  CrowdStrike has more than doubled its customer count in each of the three previous years and is on track for approximately 85% customer growth in fiscal 2021 (it’ll report its fiscal fourth-quarter results next week).

Moreover, only 9% of the company’s clients had four or more cloud module subscriptions 3 1/2 years ago.  By the end of October 2020, 61% of its customers had at least four cloud module subscriptions. This demonstrates the scalability of Falcon and is a big reason why the company has hit its long-term subscription gross margin range of 75% to 80% so early in its growth process. 

As you might imagine, investors have been paying through the nose for this superior growth.  At one point last month, CrowdStrike was valued at roughly 45 times forward-year sales.  But following its recent pullback, CrowdStrike is now closer to 35 times forward-year sales.

Astrotech Corp. (ASTC) has become a popular choice for a penny stock to watch in the past few months.  Astrotech is a tech company working in the development and commercialization of scalable companies utilizing innovative technology.  This includes several unique markets such as agriculture and biotech.

In its company portfolio are subsidiaries such as AgLAB, which develops chemical analyzers.  Also, it has 1st Detect, which produces trace detectors for the security industry. Lastly, it holds BreathTech, which works on an analysis tool to detect early signs of lung diseases.  A few weeks ago, Astrotech announced its second-quarter 2021 fiscal results. 

In this quarter alone, Astrotech managed to raise north of $37 million in gross proceeds.  CEO Thomas Pickins stated that “we are excited to have our superior technology recognized by a leading voice in the security industry, to have passed the significant $1 million purchase order milestone, and for our progress with the TSA.  We believe that we offer the most advanced ETD on the market.”

Back in February, Astrotech also announced the closing of a $9.25 million registered direct offering.  With this capital, it should be able to cover its operating expenses and use it for general working needs.

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