Hi all,
Happy National Day to all!
I am going to share on the Top 3 stocks that generated the biggest the returns for me since portfolio inception, and my thoughts on why I initially bought into them and whether I am still holding on to them or planning to sell or buy more.
1. NET ($36 entry, total gains of 229.84%)
Number 1 goes to Cloudflare. I purchased it last year after having a difficult choice between it and Fastly. In the end, I didn't go for Fastly because Fastly went up too fast during last year, which made it difficult to enter the stock.
Briefly, Cloudflare is a content delivery network (CDN) and web security firm. It delivers its various services at the network edged and stored in servers that are closer to the end-users. The team at Cloudflare is extremely good at innovation and their execution has been perfect, impressing quarter after quarter.
For the most recent Q2 2021 results, Cloudflare recorded:
- Q2 total revenue totaled $152.4 million, representing an increase of 53% year-over-year. This is just a steady performer, and 50+% revenue growth year on year is a respectable revenue growth.
- Record dollar-based net retention of 124%, representing an increase from last year's 115%
- Strong large customer growth, with a record addition of roughly 140 large customers in the quarter, bringing the total number of large customers to 1,088
All in all, a very good stock to own and is firing on all cylinders. Currently at this price, I would say this price is fully valued and I would wait for a better entry price to enter Cloudflare if interested. If Cloudflare is able to generate 50% revenue growth for many quarters to come, I think the current price is considered cheap.
2. PINS ($19 entry, total gains of 195.18%)
Number 2 goes to Pinterest. Reason why I purchased it last year is because I was comparing the ARPU (Average revenue per user) between Pinterest and some of the popular social media platforms such as Facebook, Snapchat and I realized that if the company could focus on improving this ARPU, they can really increase their topline revenue tremendously.
Pinterest is a visual social platform that allows users to find inspiration and ideas for their interests and hobbies and allows user to 'pin' certain images so that they can go back to the image later.
For the most recent Q2 2021 results, Pinterest recorded:
- Q2 revenue increased 125% year over year to $613 million. This crushed analysts' average forecast for revenue of $562 million.
- Pinterest lost 24 million users from Q1 , and U.S. users were down 5% from the second quarter of 2020.
As a result of this drop in users, the stock dropped about 25%, if not Pinterest would be the best performing stock of my portfolio thus far. However, as an investor, I do think the growth story is still intact and I will monitor for the next few quarters to look at the company performance before making any decision.
The consolation is that ARPU has increased to $1.32 USD from $1.04 USD per quarter, and I think it will still have some room to grow in terms of ARPU to match SNAP ($3.32 USD) and Facebook ($10.02 USD). I will have to monitor for the upcoming quarters. If ARPU increases, even if user growth remains stagnant or drops, revenue will also be growing.
For me, I would not be selling, or adding to my position. I will monitor to see if the thesis remains intact.
3. SE ($107.38 entry, total gains of 181.90%)
Number 3 goes to Sea Limited. By now, many people in Singapore or Southeast Asia would have heard of SHOPEE due to their advertising on various media channels. For me, I was first exposed to Sea Limited when I heard Ronaldo's advertisement for Shopee and this made me dive deep into the stock and I have averaged up 2-3 times because I have strong conviction for this stock. My initial entry was in the 70-80s.
So for people who are not aware Sea Limited is a Three Headed Monster and by investing in Sea Limited, you gain exposure to Esports, Mobile Gaming under Garena, Ecommerce( Shopee) and also Fintech (Sea Money).
For the Q2 2021 earnings, they have not reported earnings yet, but things I will looking out for are:
1. Revenue growth,
2. Updates on expansion into Latin America
3. How much Sea Money is growing
4. Gross Merchandise Value
5. How is their blockbuster mobile game Free Fire faring
Currently at this price, I would say this price is fully/over valued and I would wait for a better entry price to enter Sea Limited if looking for a entry position into the stock. For me, I would look for significant dips to average up as I can see Sea Limited doing very well in the years to come. If they are able to compete and gain market share against Latin America ecommerce giant MELI, I can see them doing very well for the next decade or so.
Hope the above information is useful for the readers, if you find them useful and if you have not yet signed up with Moomoo or Tiger Broker, please use my referral link to sign up for them. These promotions given by these brokers are for a limited time only and I would appreciate the support given to me.
1. MOOMOO
https://j.moomoo.com/005XGg
2. TIGER BROKER
https://www.tigersecurities.com/activity/forapp/invitflow-intl/signup.html?template=invite202011&invite=H5XD7L
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