Many countries are starting to shake off the effects of the pandemic..
As economies reopen, it’s time to turn our attention to companies that are poised to recover strongly..
These businesses are well-positioned to ride on new trends accelerated by the pandemic, such as telecommuting or online payments.
Many businesses have also learnt to digitalise to survive, and retail has seen a shift towards omnichannel marketing and phygital (i.e. physical + digital) concepts.
Here are some interesting growth stocks to look out for as we welcome the month of July.
Nike (NYSE: NKE)
When it comes to sports footwear and apparel, Nike rules the roost as being one of the most recognisable brands in the industry.
The company with the “swoosh” logo recently reported its full fiscal year 2021 earnings (FY2021) for the period ended 31 May 2021.
For its fourth quarter, sales nearly doubled year on year to US$12.3 billion from US$6.3 billion a year ago.
Gross margin saw a sharp improvement from 37.3% to 45.8% due to lower factory cancellation charges and a higher volume of shipment as the prior quarter witnessed supply chain bottlenecks.
The sports giant reported a net profit of US$1.5 billion, reversing a loss of US$790 million incurred last year due to the temporary closure of physical stores.
For FY2021, net income more than doubled year on year to US$5.7 billion.
CEO John Donahoe attributes the strong growth to three factors — connecting with customers through strong brand experience, product innovation, and Nike’s digital edge.
The last point is worth elaborating on.
Nike’s suite of apps has positioned it well to capture online demand amid the pandemic, and growth and member demand outpaced total digital growth, hitting US$3 billion.
The company now has 300 million Nike members and digital now drives 35% of its total revenue, more than three years ahead of its original plan.
By the fiscal year 2025, Nike intends to derive half of its revenue from digital sources and is working towards achieving this goal.
Fiverr (NYSE: FVRR)
Fiverr runs a platform that connects businesses (buyers) with skilled freelancers offering digital services.
These services are split into more than 500 categories across nine verticals including graphic design, animation and digital marketing.
The pandemic has accelerated the company’s growth as more people choose to do freelance work due to movement restrictions or because companies are restructuring.
Active buyers increased by 56% year on year in the 12 months ended 31 March 2021 to hit 3.8 million.
What’s more, spend per buyer on Fiverr’s platform has also jumped by 22% year on year to US$216, with high-value buyers (defined as those with annual spend per buyer of more than US$500), representing 59% of the company’s core marketplace revenue.
As a result, Fiverr saw revenue double year on year during the quarter ended 31 March 2021 to US$68.3 million.
Fiverr expects business momentum to continue and is upgrading its full-year 2021 guidance for a 59% to 63% year on year revenue growth.
Sea Limited (NYSE: SE)
Sea Limited is a global consumer internet company founded in Singapore that is making inroads into Asia and Latin America.
The company has three core businesses — digital entertainment (gaming), e-commerce and digital payments.
Group revenue surged by 146.7% year on year to hit US$1.8 billion, driven by a more than doubling of the year on year bookings for Sea’s digital entertainment division.
For Sea’s fiscal 2021 first quarter (1Q2021), quarterly active users climbed 61% year on year to hit 648.8 million while a more important metric, quarterly paying users, more than doubled year on year from 35.7 million a year ago to 79.8 million in its latest quarter.
Sea’s self-developed mobile game Free Fire continued to be the highest-grossing mobile game in Latin America and Southeast Asia during the quarter and has held pole position for the last seven consecutive quarters.
The company’s e-commerce division, under the Shopee brand, saw gross orders soar 153% year on year to hit 1.1 billion.
Gross merchandise value doubled year on year to US$12.6 billion.
Finally, on the digital payments front, Sea Limited is witnessing accelerated adoption of its SeaMoney currency.
Total payment volume tripled year on year to hit more than US$3.4 billion, while quarterly paying users utilising the company’s mobile wallet jumped more than 145% year on year to hit 26.1 million.
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Disclaimer: Royston Yang owns shares of Nike.
