Two More Ways To Invest In Work-At-Home Technology

Remote-Work And eCommuting Are Here To Stay

One of the hottest trades since the start of the pandemic has been the work-from-home stocks. Names like DropBox (DBX) , Zoom (ZM), and Slack (WORK) have become buzzwords as they experience never-before-seen growth. While these stocks command the mainstream media’s attention, there are others quietly working in the background providing the hardware, software, and support businesses need to thrive in today’s new world.

When it comes to technology and growth, the sector has had a robust double-digit revenue growth outlook for years. Post-pandemic there is no change to the outlook, no negative change, when looking forward. If anything, growth in most will begin to accelerate because of remote working. The Grand Experiment the pandemic forced upon us proved that working from home and eCommuting is not only easy, but it can increase productivity in many businesses.

Logitech Is A Buy, Buy, Buy!

Logitech (LOGI) is not a new name in the tech world but it is one of the best-positioned to ride out the work from home revolution. The company is in business designing, manufacturing, and selling peripherals for digital devices across the board. What this means is speakers and audio systems of all variety, wireless and Blue Tooth devices, high-performance computer mice, ergonomic and specialty keyboards, steering wheels, flight-sticks, and etc. Basically, anything you could ever want or need to improve, upgrade or bling-out your at-home office.

Logitech reported earnings this morning and not only beat consensus the company reaffirmed the full-year guidance above the analysts consensus. Revenue for the quarter came in at $709.25 million, up 13.6% from the prior year and 700 basis points above the consensus. On the bottom line, adjusted EPS grew by 10.5% and beat by $0.06 while GAAP EPS blew past the analyst’s consensus by 400%. That’s not basis points, that’s percentage points, 400%.

“We have delivered five consecutive years at or near double-digit growth, and Logitech’s products have never been more relevant,” said Bracken Darrell, Logitech president and chief executive officer. “Video conferencing, working remotely, creating and streaming content, and gaming are long-term secular trends driving our business. The pandemic hasn’t changed these trends: it has accelerated them.”

The best part is that Logitech is a dividend payer. The yield is low near 1.5% but quite safe and growing at a 22.4% rate over the past five years. Today’s results not only reinforce the idea the payout is sound (the payout ratio is very low at 35%) but that a 7th distribution increase is highly likely. On a technical basis, the market seems to agree with my assessment because price action is up 5% in the premarket and setting a new all-time high.

DataDog, It’s What Businesses Need To Compete

DataDog (DDOG) is one of 2019’s technology unicorns. IPO’s late in the year, the stock has held up well during the sell-off and moving up to set new highs right now. The reason is simple, DataDog’s cloud-based SaaS platform is helping businesses around the world compete in today’s digital climate. When I say “today’s digital climate” I am referring to secular trends in technology that were in place before the pandemic. Those trends have accelerated making the need for real-time Big Data analytics more important than ever.

The Q1 results speak for themselves, they need no embellishment, revenue is up 87.5% from the previous year and beat consensus by 1000 basis points, 10%. EPS is another shockingly good number, GAAP of $0.02 and Adj $0.06 both beat and by enough to show profits vs expected losses. Within the report the closest watched metric, customers with recurring revenue greater than $100K, nearly doubled for the quarter. Looking forward, the company’s guidance is well above the consensus range and already driving a round of upward analyst revisions.

Rosenblatt is the first to come out with a note to shareholders, a positive note, citing trends across business segments with strength in customer growth, new acquisitions, and international markets. They maintained an already bullish Buy rating but upped the price target by 23% to $75 per share. The technical outlook here is bullish here too, the stock is surging to a new all-time high even as I write this post.