Let’s go back to the dominant theme of 2023 – AI.
Today’s stock pick is a stock that’s racing past its peers, with recent earnings revealing strong free cash flow generation and clear path toward profitability.
- Its revenue grew over 40% from a year ago
- It’s controlling its costs while still growing revenue
- It has zero debt and nearly a billion dollars in cash and short-term equivalents
- And it has released new AI features to its core platform
Its stock has been a strong performer this year, up nearly 40% year-to-date.
Still, like many tech stocks, it’s still a far cry from its 2021 peak. In fact, it’s still nearly 60% down from that peak.
But this is good news.
Because if the stock could trade at that level back then – before all this fundamental growth – that bodes well for investors getting in now.
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monday.com Ltd. (MNDY)
Monday.com makes workflow management software, and counts names like Asana and Atlassian as its peers. But Monday’s stock has outperformed most of them – and for a good reason.
Most of these cloud-based workflow management software stocks are still chasing profitability. But so far, Monday.com looks to be the closest to it – thanks to disciplined cost control, high revenue retention rates (over 110% in the latest quarter), and strong customer acquisition.
On top of its solid revenue growth and strong free cash flow generation, Monday.com’s management also increased its guidance for the year. Said guidance would result in an almost 40% increase in full year revenue compared to the year before.
All in, Monday.com is a solid stock with strong growth opportunities ahead. That said, such results mean that is a bit expensive compared to its peers (although again, it’s still far below the 2021 peak) – so if you do take a position in this stock, be smart with your position sizing.
To your wealth,
Felix @ Ace of Investing