It’s July: the height of summer! In ordinary times, July is the month for swimming pools, summer camps, and fireworks displays. But this July is anything but ordinary, and your summertime plans have probably changed a lot because of the current situation…
With that in mind, we asked five Motley Fool contributors to share their best picks for investors in this unusual July. They came back with NV5 Global (NASDAQ:NVEE), Slack Technologies (NYSE:WORK), NextEra Energy (NYSE:NEE), Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B), and Apple (NASDAQ:AAPL). Here’s why they think these stocks could put fireworks in your portfolio this month.
A small fish in an ocean of opportunity
Jason Hall (NV5 Global): Shares of this small infrastructure engineering company are up almost 75% from the March lows at this writing. Yet even with those big gains it still represents an incredible bargain for growth investors.
What makes NV5 Global appealing? Some $94 trillion needs to be invested in global infrastructure by 2040 to meet society’s needs. The global middle class is adding about 1 billion new members per decade, mostly in developing nations, while infrastructure in developed countries is in dire need of modernization. NV5 is positioned to be a participant in both sides of this push.
Since going public less than a decade ago, NV5 has grown revenue 716% and earnings per share 155%, though GAAP earnings have fallen over the past couple of years largely because of expenses related to some acquisitions. Those same acquisition expenses that has played some role in the share price falling; concerns that management has grown too quickly and too aggressively.
Founder and CEO Dickerson Wright has a proven track record of building engineering businesses, and the company is rigorous about wringing excess back-office costs out and making the most of the skillset each acquisition brings. I expect that, over the long run, this will prove out on the bottom line.
Buying NV5 right now isn’t about precision. It’s hard to say how infrastructure spending and NV5 will be impacted by COVID-19. But at recent prices, it’s too cheap to ignore, considering its enormous growth prospects over the next decade.
This stock is no Slacker
Dan Caplinger (Slack Technologies): The COVID-19 pandemic has created a huge shift in the way that people work. With health concerns keeping millions of workers out of their offices, the ability to do work remotely has become critical. Without the tools needed collaborate effectively, the already skyrocketing levels of unemployment would be even higher. Slack Technologies has developed a platform that’s tailor-made for the current situation, yet for whatever reason, its stock hasn’t gotten the same level of interest that peers like Zoom Video Communications have gotten.
The first quarter of this year showed investors the potential growth ahead of Slack. The company added 90,000 new customers during the three-month period, which was more than it had brought on for the entire previous year. Although many of those customers use Slack’s free offerings, paid customer counts were also up 28%, which helped boost revenue by 50% from the year-earlier quarter.
Slack is also getting tested by fire. Users are spending more time than ever on the platform, and clients who are already onboard have reupped their commitment to Slack. Net dollar retention came in at 132%, showing that the typical customer is spending a lot more than they did a year ago to take full advantage of the features that Slack offers them.
It’s true that Slack doesn’t have the workplace collaboration space all to itself. Many worry that Microsoft‘s (NASDAQ:MSFT) Teams platform will remain a big competitor and limit Slack’s growth. Yet many users find the Slack’s features greatly superior. Moreover, with a new partnership with Amazon.com (NASDAQ:AMZN), Slack has put a powerful ally in its corner. That could keep Microsoft at bay and let Slack reach its full potential.
Even once the pandemic ends, Slack CEO Stewart Butterfield thinks that there’s been a generational shift in the workplace that won’t go back to the way it was. A remote-friendly option that effectively replaces email has been a long time coming. Now that it’s here, Slack intends to make it available to the whole world. That’s good news both for the company’s users and its investors — especially as Slack keeps moving forward and adding new features to its workplace collaboration toolbox.
Two hot trends in one
John Bromels (NextEra Energy): I once spent five summers in a row in Florida, and I can tell you that July in Florida means one thing: air conditioning. With temperatures soaring in the Sunshine State, electric utilities Florida Power and Light and Gulf Power are going to be busy powering the air conditioning for their combined 5.5 million customers. Luckily, both are owned by electricity juggernaut NextEra Energy, the largest utility company in the U.S., and my pick to buy this month.
Even all that air conditioning only uses about half of the power generated by…
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