Hot stocks for the Leap Year
On Ausbiz's 'The Call' Leap Year Special show, moomoo Market Strategist Jessica Amir discussed 10 stocks that are worth considering holding until the next leap year in 2028, alongside Mark Gardner from MPC Markets. Watch the full interview below or keep reading for a summary of the show.
1、Xero (XRO) - Stock of the day：
Jessica says the stock price has consistently risen each time it's been mentioned. Here are some noteworthy details about Xero:
Xero boasts a user base of 4 million globally, a number that continues to grow steadily. In Australia, it holds an impressive 50% market share in small business accounting. Recently, Xero launched a new offering in the US, allowing customers to pay bills directly through its platform. This move signals the potential for further growth in its offerings.
Estimates suggest that Xero's free cash flow could surge by over 40% through 2027 from its current NZ$107 million in the first half of the year. This projection is backed by management's commitment to delivering a "rule of 40 performance."
With an annual growth rate exceeding 20%, Xero's success in the US and UK markets is expected to continue.
The company's remarkable growth trajectory may prompt a reassessment of its dividend policy, as Xero has traditionally favored investing in growth over distributing dividends.
2、Audinate (AD8) - bullish :
Jessica suggests considering three key points:
Firstly, it's worthwhile to explore niche businesses, such as this leading AV industry player specializing in networking digital audio signals. Despite remarkable growth since its 2017 listing, there's a possibility of overvaluation now. However, there remains potential for further growth, with anticipated earnings and price target upgrades. The company also achieved its FY24 objectives six months ahead of schedule.
Secondly, AD8 revealed strong financial performance. It reached its first net profit after periods of losses, along with significant increases in sales and gross profits, indicating robust financial health. Moreover, the company's ability to maintain a high margin of 72%, despite a 47.7% increase in revenue, is noteworthy, especially considering the support from a weaker AUD against the USD.
Thirdly, Jessica suggests considering its growth potential. AD8 has achieved significant milestones, such as syncing audio directly to the cloud, enabling online production from any location, which reduces the need for mobile studios and full broadcast trucks. Additionally, despite cost-cutting measures, AD8 has been successful in securing new contracts. It recently launched its first OEM video product utilizing the next-generation Dante AV Ultra, which debuted at the recent ISE tradeshow.
3、Nextdc (NXT) - Bullish：
Given hyperscale AI growth, the prospects for NXT are promising. As a leading data center business operating across major Australian cities and expanding internationally, it's strategically positioned to tap into emerging AI opportunities. Notably, it has earned sustainability certification.
The market is optimistic about Nextdc's future, evident in its impressive performance this year with shares rising by 25%. This surge is propelled by the escalating demand for hyperscale cloud and AI services, with Gartner projecting a 25% CAGR in this sector until 2028. This high demand underscores the importance of Nextdc's services.
Revenue growth is being fueled by the expansion of data centers to meet hyperscale demands. Nextdc is on the verge of significant expansion both domestically and internationally. With approximately half of its revenue derived from regions like NSW and ACT, it holds immense potential for further geographical and capacity expansion.
Financially, Nextdc is robust, boasting a 20% CAGR in underlying earnings. Analysts are optimistic about its future. This collective confidence suggests that Nextdc is on track to achieve profitability by 2028.
4、Liontown (LTR) – bullish：
Jessica provides insights on Liontown's long-term growth prospects from three key perspectives:
Lithium Sector: Amid a drop in lithium prices, driven by surplus supply over demand, prices have fallen by 85% from their highs, returning to 2021 levels.
Company: With Liontown primarily held by Hancock and nearing production without current profitability, the company is seen as undervalued. Profit estimates suggest potential returns by 2025.
EV Market: Changes in the EV market, including a shift towards hybrids over pure EVs, particularly in China where EVs account for 25% of the market， and are expected to witness a 50% increase in NEV demand compared to the previous year. There is also anticipated growth in NEV demand, with hybrids requiring less lithium, and a forecasted return to a lithium demand deficit by 2029, possibly sooner.
5、Sprott Uranium Miners ETF (URNM) - bullish ：
URNM has shown a bullish trend recently, Jessica says“ If you liked it at its high of almost $59, you’ll love it now at $79.67. ” This price increase is attributed to several tailwinds for uranium:
The International Energy Agency (IEA) forecasts that global nuclear power needs will double by 2050 to meet net-zero commitments.
NATO's push to increase defense spending, with the US being a main source of energy.
Rising uranium prices, reaching a 16-year high due to increasing demand outpacing supply.
Countries like the US, Canada, and Japan are moving towards using nuclear power as their primary energy source by 2050, given its clean energy benefits and lower resource requirements compared to other forms.
Therefore， ASX stocks such as Boss Energy and Paladin Energy have seen increases of 40% and 27% respectively this year, while the biggest Uranium ETF URA is reaching new highs.
6、iShares Bitcoin Trust(IBTI) - bullish ：
Bitcoin will probably rally over the next 6-12 months. Since market anticipation surrounding Bitcoin halving is scheduled for mid to late April. Historically, Bitcoin prices have seen significant increases in the 6-12 months following each halving event, often setting new records.
Regarding ETFs:
There have been outflows of $7.4 billion from the expensive Grayscale BTC ETF, while $6 billion has flowed into the cheapest BTC ETF IBIT, which is just 1 of 10 of the BTC spot ETFs that have contributed to a Monthly-to-Date return of 28%.
IBIT, offered by iShares, stands out in terms of cost efficiency, brand recognition, and reputation. With an expense ratio of 0.12%, IBIT beats competitors like Ark (0.21%) and VanEck (0.20%).
These factors position IBTI as a promising choice for investors seeking exposure to the potential Bitcoin rally ahead.
7、Nvidia（NVDA） - bullish：
A new generation of tech that we haven’t even seen yet. could it make Nvidia the second biggest company in the US？ Jessica says there are four points to note ：
The majority of Nvidia's revenue comes from its data center division, supplying chips to tech giants like Microsoft, Meta, Amazon, and Alphabet, accounting for 40% of revenue. These companies are increasing orders for AI chips to enhance competitiveness and efficiency, positioning Nvidia as an essential innovation partner.
Nvidia's CEO's strategic insights point towards AI demand surging across industries, with expansions into healthcare and agriculture on the horizon.
A significant decrease in shipment time for H100 AI chips to under 3-4 months is boosting revenue and productivity.
Nvidia's revenue surged by 265% YoY to a record $22.1 billion, surpassing expectations. Data center revenue spiked by 409% YoY to $18.4 billion in the face of impressive growth rates. No other company has these growth rates and has the majority of its revenue from the biggest companies in the world.
8、Uber (UBER) – bullish ：
Uber has risen by 57% since Jessica spoke about it in November Auzbiz‘s interview. Over the last 12 months, Uber has transitioned from losses to profits, a trend expected to continue.
Strategic shifts: Uber sold its profitable autonomous driving division for $4 billion in 2020, leading to profitability. Layoffs and network expansions improved driver availability, attracting new customers. The introduction of the Uber One subscription service has been successful.
The first-ever full year of profitability was declared recently, marking a milestone in Uber's 14-year history.
Capital return: Making a $7 billion buyback, supporting share price growth.
Inclusion in S&P 500: Uber's addition to the benchmark index in December, earlier than anticipated.
Future outlook: Projected earnings growth of 30-40% over the next three years driven by robust gross bookings growth, loyal customers, and new service offerings.
9、Square (SQ2) – bullish：
Square is behind the 3rd most popular money transfer app in the US, Cash App, and Square also offers tap-and-go services for coffee or doctor appointments. Additionally, Square is generating revenue from Bitcoin operations, benefiting from the Bitcoin halving event. The company is now introducing a Bitcoin wallet as part of CEO Jack Dorsey's vision for a comprehensive one-stop-shop platform. In addition, it's important to consider Square’s future proof and diversification.
Business model:
28.8% of revenue is sourced from transactions via Cash App and Square terminals, expanding market share and customer base among merchants and businesses.
43% of revenue derived from Bitcoin-related activities, including Bitcoin holdings and transactions facilitated and the Bitcoin mobile wallet app.
27% of revenue generated from subscription services.
Focused on future growth:
Anticipating 40% profit growth ahead, with sustained long-term expansion prospects.
Positioned to benefit from incidental inflation effects such as rising coffee prices and increased doctor consultation fees, aligning with Square's diverse business model.
Prepared to leverage potential discretionary spending boosts resulting from future central bank rate cuts in 2024.
10、BHP Group Ltd (BHP) – bullish long-term：
BHP stands as a key player in the ASX with significant market positions in various ETFs. Although facing a downturn in iron ore prices, growth opportunities abound:
Iron ore challenges: Despite lingering concerns over China's property market and demand, factors like seasonal construction peak in March and April. Vale also has plans to diversify iron ore sales outside China, which suggests a potential upturn.
Diversified commodity portfolio: BHP aims to lead in potash and copper production, mitigating risks and capitalizing on increasing copper demand over the coming years. With 26% of revenue generated from copper, BHP is well-positioned for growth as LME participants show bullish sentiments due to supply deficits expected until 2040.
Geopolitical diversification: BHP's revenue diversification extends to 54% from China, providing a more geographically balanced income stream compared to Rio and FMG.
Strong financial performance: BHP boasts solid financial health, consistent dividend payments, and strategic investments in growth opportunities like potash.
Copper growth potential in South Australia: BHP's plans to expand copper production to over 500kt(from 310-340kt) present significant growth opportunities beyond analyst forecasts.
11、Wisetech（WTC）-bullish：
Firstly, WiseTech has over half of the top 25 global freight forwarders. WiseTech's CargoWise platform facilitates efficient management of global supply chains with a focus on customer retention and new business acquisition, with 84% of revenue reoccurring.
Secondly， it has strategic investments in R&D. It's continued focus on innovation, such as the introduction of new products like NEO for streamlined freight planning and tracking, and enhanced customs and compliance features targeting a wide market segment.
Thirdly, WiseTech has strong financials, margins, track record, and growth. WiseTech reported a 32% revenue increase to $500 million in 1H24, exceeding expectations. Noteworthy client wins like Sinotrans and strategic acquisitions are poised to fuel further growth.
Lastly， WiseTech foresees a return to EBITDA margins exceeding 50% by FY26, supported by scaling operations and rising demand for logistics technology.
Click to Watch the Full Interview. (Recorded on Feb,29th)
