Facebook (NASDAQ:FB) has been one of the great investment successes of this past decade. The company’s social media platform has attracted billions in advertiser spending that has propelled it to become one of the most profitable companies out there. With Congress taking a deeper look at the company’s business and the recent revelations about users’ data privacy (or lack thereof), though, there are likely some investors out there looking to put money elsewhere.
Though Facebook’s performance over the past several years will be incredibly hard to replicate, we asked three of our contributors to sift through financial and business models to come up with three stocks that have a shot at meeting (or beating) Facebook’s returns. Here’s why they picked these stocks.
Top 5 China Stocks To Watch Right Now: Aaron's, Inc.(AAN)
Once upon a time, I followed Aaron’s, Inc. (NYSE:AAN) stock because I would drive by one of its stores in Peterborough, Ontario, on my way to a family member’s cottage. Otherwise, I’m not sure I ever would have heard of the lease-to-own company.
While investors were disappointed with Aaron’s first-quarter earnings, CEO John Robinson was far more sanguine.
“Revenue grew 13.1% in the first quarter and we continued to invest in new retail partnerships and other initiatives to drive long-term earnings growth,” said Robinson. “While profitability was lower for the quarter due to increased operating expenses, we are encouraged by the early results we are seeing from our strategic investments and believe we are on track to achieve our 2018 financial objectives for each of our businesses.”
Over the past decade, Aaron’s stock has generally had one or two corrections in every calendar year. Otherwise, it’s been very consistent delivering annualized total returns of 10%.
Now that the first correction is out of the way, the likelihood of another one in the next 3-4 months seems unlikely unless it delivers a big miss in the second quarter.
Long-term, Aaron’s in a great business, in good times and bad.
Top 5 China Stocks To Watch Right Now: Attunity Ltd.(ATTU)
Attunity Ltd (NASDAQ:ATTU) is a provider of software solutions that enable access, management, sharing, and distribution of data across enterprise platforms and the Cloud.
The stock is currently holding a Zacks Rank #2 (Buy) and looks like one of our hottest growth and momentum options right now. Shares have soared 31% over the past month, while its full-year EPS estimates have improved by 74% in that time.
The company is now expected to be profitable on the back of 280% earnings growth in 2018. That EPS growth is projected to be supported by revenue growth of 24%. Attunity is expected to witness a long-term earnings growth rate of 20%.
Top 5 China Stocks To Watch Right Now: AeroVironment, Inc.(AVAV)
Drones have been a topic of excitement in the press for years, but very few companies generate meaningful revenue from them. One that does is AeroVironment, the leading supplier of small drones to the military. The company makes drones used for surveillance and combat support, and some drones even have been equipped with strike capabilities.
In the first three quarters of fiscal 2018, drone revenue jumped 36% to $153.7 million and gross margin in the segment was up 51% to $55.3 million. The company also has a growing presence with customers other than the U.S. military, highlighted by a $44.5 million order from a Middle Eastern country in March. Commercial drone use is beginning to expand as well, with surveillance, energy production, and agriculture shaping up as major growth markets. According to Statistics MRC, the small drone market is expected to grow from $6.8 billion in 2016 to $14.7 billion in 2023.
Drones are AeroVironment’s biggest business, but it’s not the only industry in which the company is positioned for growth. AeroVironment is one of the leaders in electric vehicle (EV) chargers, with solutions for consumers, businesses, and emerging charging networks. The segment isn’t growing as quickly as drones, but charger revenue in the first three quarters of fiscal 2018 grew 6% to $27.9 million and gross profit improved 17% to $7.9 million. If electric vehicles grow from about 1% of auto sales in 2015 to 24% of sales in 2025, as Bloomberg New Energy Finance predicts, this could be another segment that grows exponentially in the next decade.
AeroVironment’s current price-to-earnings ratio of 41 is expensive, but both drones and EV chargers are going to be big growth businesses over the next decade, and I think this is a stock that’s worth paying a premium for.
Top 5 China Stocks To Watch Right Now: mCig, Inc.(MCIG)
Las Vegas-based mCig Inc (OTCMKTS:MCIG) is a marijuana industry holding company. Once limited to vaporizers, it has transformed itself into a full-scale marijuana cultivation construction company. While they had operated only in Nevada, the company landed contracts in California and New York earlier this year.
Seeing business come in from across the country shows encouraging signs and could make MCIG one of the top marijuana penny stocks. However, financials also remain sparse. The company saw $1.72 million in revenues in 2016. This grew to $4.78 million in fiscal 2017, and the company made $1.53 million in that fiscal year. The company has brought in over $6 million in the first three quarters of 2018.
Still, investors should still treat this as a speculative play. The stock enjoys rapidly rising revenues and profits. However, MCIG stock still trades under 25 cents per share, indicating lingering investor doubts. It has never traded above $1, though it briefly reached 92 cents per share in 2014. Still, it will need to see more growth before becoming one of the hot penny stocks.
The current price stands well above the 5-cents-per-share level where the stock traded for most of 2016. If the company can continue gaining traction, its current $91 million market cap could rise much higher.
Top 5 China Stocks To Watch Right Now: Entravision Communications Corporation(EVC)
Entravision Communications Co. (NYSE: EVC) is a Spanish-language media company based in Santa Monica, Calif.
Entravision’s profit potential lies with the nation’s rapidly expanding Latino community, which makes up the majority of Entravision’s customer base.
From 2000 to 2014, Latino immigration accounted for more than 50% of the nation’s total population growth. In the same period, the nation’s total Latino population expanded to roughly 55 million people.
Over the next 10 years, the American Latino population is expected to expand by another 24 million Latino Americans – an increase of over 30%
This growing audience is already showing in the company’s growth. Over the last year, the company had a return on equity of 49.84%. That’s over 350% higher than the industry average of 11.99%.
With an expanding consumer market continually seeking new content from major Hispanic media outlets, it’s likely that Entravision will experience sustained growth well into the future.
EVC currently boasts a perfect VQScore, and Wall Street agrees with us. Analysts have put a high price target of $11 on the company’s stock – a 119% increase on today’s price of $5.02.