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Recovery "kid" Stocks: Ready to become Adults?

For last few weeks I was developing an hypothesis of recovery "kid" stocks and their likelihood of getting into "Adult" valuations. So before I get too far, let me define the terminology:

Recovery: Stocks which were once high-flying crashed with stock prices below 15
"Kid" stock price: Stock price in range of 5-15
Adult stock price: Stock price generally greater than 20
With is criteria, during this earnings season which is just wrapping up, I was monitoring stocks in technology sector and after some research, shortlisted 4 stocks which have high chance of reaching "Adult" valuations.

  1. FireEye (FEYE: $15) - this stock crashed from over 90 to close to 10 in 2 years. After changing CEO and business model from selling security appliances to recurring software revenues, this stock is on mend and could see 20+ price in next 12 months. This also happens to be in hot security area and with hacks like "WannaCry", companies are ready to invest in this part of technology. 
  2. Nutanix (NTNX: $18) - this had very successful IPO with stock shooting to over $45 in few weeks only to crash after disappointing quarter. It's back to where company had IPO at. So essentially one could buy this stock at IPO with no premium. It is also in one of the hottest technology sector of hyper convergence (server, storage and networking). It has also started the business transformation of selling hardware to recurring software revenues. It has potential to go over 25 in next 12 months (provided they don't have similar quarterly mishaps). 
  3. AMD (AMD: $11) - This #2 CPU company had already shot from $2 to over $15 in last 12 months. It has come down to $11 due to lukewarm response to new product introductions and looming competition from Intel and Nvidia. It's tough competition but it also has chops to play in one of the hottest semiconductor sector (GPU, AI, ML). It would take 2+ years to reach adulthood but in next 12 months, it could climb back to 15+
  4. Blackberry (BBRY: $11) - To be honest, this caught my attention when one of the most vocal short (Andrew Left) recommended this for long position. After that I did some research and found a completely different company than what we know. It is in middle of business transformation from selling smartphones to selling software and services. And guess what - one of the oldest asset (QNX which I had used 20 years back in one of my product) had suddenly become a hot property in two sectors - Car-tech and IOT. This stock could double from here in 2 years.
First two companies (FEYE and NTNX) would cross $1Billion in next 12 months and other two are already over that threshold. Barron's had an article that when a company reaches $1Billion and growing, valuations start reflecting that in non-linear fashion. It happened to many many companies. So could any of these would become next NVDA, FB or AMD (in terms of stock returns). Well you have to figure that out yourself by investing.
(As always, these are risky recommendations so do your own research before investing
These are my personal opinions and do not represent company I work at).

Have a great weekend
/Shyam

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