SOUN Set to Report Q3 Earnings: Buy, Sell or Hold the Stock?

STOCK CLIMBS OVER 20 POINTS AT ITS HIGH

Today’s episode of Full Court Finance at Zacks explores the stock market’s surge to fresh highs following the presidential election. The episode then dives into three growth-heavy Zacks Rank #1 (Strong Buy) stocks—Shopify, Nu Holdings, and Vertiv—to consider buying and holding for the next 10 years.

See the Zacks Earnings Calendar to stay ahead of market-making news.

The market roared to all-time highs on Wednesday following the presidential election. The Nasdaq and the S&P 500 added to their mid-week gains on Thursday as Wall Street celebrates the end of uncertainty and the likelihood of lower corporate taxes, less red tape, and economic growth-focused efforts during a second Trump term.

It is also worth remembering that partisan politics does not drive the stock market. For instance, average annual stock market returns during the Trump and Obama administrations—which included periods of unified and divided governments—were almost the same: 16.0% and 16.3%, respectively.

Plus, the bull market is only two years old (bull markets have lasted roughly five and a half years on average), and the November-January stretch is the best three-month period for Wall Street dating back to 1971.

Given this backdrop, investors likely want to add exposure to the stock market in November. So let’s explore the three growth-heavy Zacks Rank #1 (Strong Buy) stocks investors might want to buy and hold for the next decade.

Is Shopify a Must-Buy Growth Tech Stock Trading 50% Below Its Highs?

Shopify Inc. SHOP shares have blown away Amazon and the Tech sector since its 2015 IPO and over the past two years. Yet SHOP trades 50% below its all-time highs heading into its Q3 2024 earnings report on November 12.

Shopify grew its revenue from $1 billion in 2018 to $7 billion in 2023 by expanding its offerings and its reach across entrepreneurs, small and mid-businesses, and larger enterprises.

Shopify helps its clients with everything from website creation and design to sales, marketing, payments, automation, inventory, shipping, and more across digital commerce and brick and mortar.

Shopify is thriving in an Amazon-dominated e-commerce industry by catering to sellers and businesses, while Amazon AMZN is ruthlessly focused on consumers.

Shopify raised its prices in 2023 (by roughly 30% for its various plans) for the first time in over a decade to help make up for slowing sales growth. Shopify is also prioritizing streamlining efforts and profits.

Dubai, UAE – Vertiv , a global leader in critical digital infrastructure and continuity solutions, recently concluded its highly anticipated AI Solutions Innovation Roadshow in Dubai, UAE.

Held at Crowne Plaza – Dubai Marina, the event was part of a global series aimed at educating and equipping customers and consultants with essential expertise for deploying high-performance computing (HPC) and artificial intelligence (AI) infrastructure. During the roadshow, Vertiv experts introduced the eight infrastructure imperatives to enable AI, shared insights on key challenges and opportunities and provided participants with a deep understanding of the latest innovations supporting HPC infrastructure, as well as the impact on data center power and cooling systems.

Tassos Peppas, Regional Director for Middle East, Turkey and Central Asia (METCA) region at Vertiv, said: "Dubai stands at the forefront of high-performance computing and AI innovation, setting a powerful example for the region and beyond. With our AI Solutions Innovation Roadshow, we are bringing the latest advancements directly to industry leaders, empowering them to explore transformative infrastructure that is critical for tomorrow’s digital landscape. We were thrilled to engage with our customers in Dubai, demonstrating how Vertiv’s solutions not only optimize current operations but also position them to lead confidently into the future of AI-driven possibilities.”

The Vertiv AI Solutions Innovation Roadshow emphasized the essential aspects for adopting AI-compatible infrastructure and service to maintain operational excellence. Discussions explored power optimization for AI workloads, alternative energy solutions, and readiness for liquid and hybrid cooling technologies.

During the roadshow, Vertiv showcased the Vertiv™ Liebert® XDU 450 Coolant Distribution Unit (CDU), the latest liquid cooling solution designed to enhance the performance and efficiency of HPC systems and modern data center applications.

Speakers from Vertiv for the Dubai event included Tassos Peppas – Regional Director METCA, Mahmoud Abdelmoneim – Sales Director Middle East, Ian Paul – Hyper & Colo Strategic Segments Director METCA, Majid Eid – Account Manager Thermal METCA, Russel Payne – Senior Manager Application Engineering EMEA, Slawomir Dziedziula – Director of Application engineers EMEA, and Nikola Petkovic – Senior Solutions Architect EMEA.

For more information, visit Vertiv.com/METCA.

About Vertiv

Vertiv brings together hardware, software, analytics and ongoing services to enable its customers’ vital applications to run continuously, perform optimally and grow with their business needs. Vertiv solves the most important challenges facing today’s data centers, communication networks and commercial and industrial facilities with a portfolio of power, cooling and IT infrastructure solutions and services that extends from the cloud to the edge of the network. Headquartered in Westerville, Ohio, USA, Vertiv does business in more than 130 countries. For more information, and for the latest news and content from Vertiv, visit Vertiv.com.

Forward-Looking Statements

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27 of the Securities Act, and Section 21E of the Securities Exchange Act. These statements are only a prediction. Actual events or results may differ materially from those in the forward-looking statements set forth herein. Readers are referred to Vertiv’s filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q for a discussion of these and other important risk factors concerning Vertiv and its operations. Vertiv is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.

Media Relations:

Micheline Kassis

BEYOND Marketing & Communications

micheline@beyondgcc.com

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Here are three stocks with buy ranks and strong growth characteristics for investors to consider today, November 8:

Interface, Inc. TILE: This modular carpet products company carries a Zacks Rank #1, and has witnessed the Zacks Consensus Estimate for its current year earnings increasing 7% over the last 60 days.

Interface, Inc. Price and Consensus

Interface, Inc. price-consensus-chart | Interface, Inc. Quote

Interface has a PEG ratio of 1.20 compared with 1.34 for the industry. The company possesses a Growth Score of A.

Interface, Inc. PEG Ratio (TTM)

Interface, Inc. peg-ratio-ttm | Interface, Inc. Quote

The Progressive Corporation PGR: This insurance holding company carries a Zacks Rank #1, and has witnessed the Zacks Consensus Estimate for its current year earnings increasing 5.7% over the last 60 days

The Progressive Corporation Price and Consensus

The Progressive Corporation price-consensus-chart | The Progressive Corporation Quote

The Progressive Corporation has a PEG ratio of 0.72 compared with 1.38 for the industry. The company possesses a Growth Score of B.

The Progressive Corporation PEG Ratio (TTM)

The Progressive Corporation peg-ratio-ttm | The Progressive Corporation Quote

Vertiv Holdings Co VRT: This digital infrastructure company carries a Zacks Rank #1, and has witnessed the Zacks Consensus Estimate for its current year earnings increasing 4.3% over the last 60 days.

Vertiv Holdings Co. Price and Consensus

Vertiv Holdings Co. price-consensus-chart | Vertiv Holdings Co. Quote

Vertiv Holdings has a PEG ratio of 1.31 compared with 12.42 for the industry. The company possesses a Growth Score of B.

Vertiv Holdings Co. PEG Ratio (TTM)

Vertiv Holdings Co. peg-ratio-ttm | Vertiv Holdings Co. Quote

See the full list of top ranked stocks here.

Learn more about the Growth score and how it is calculated here.

Zacks Investment Research

Growth investors focus on stocks that are seeing above-average financial growth, as this feature helps these securities garner the market's attention and deliver solid returns. But finding a growth stock that can live up to its true potential can be a tough task.

That's because, these stocks usually carry above-average risk and volatility. In fact, betting on a stock for which the growth story is actually over or nearing its end could lead to significant loss.

However, the Zacks Growth Style Score (part of the Zacks Style Scores system), which looks beyond the traditional growth attributes to analyze a company's real growth prospects, makes it pretty easy to find cutting-edge growth stocks.

ServiceNow (NOW) is one such stock that our proprietary system currently recommends. The company not only has a favorable Growth Score, but also carries a top Zacks Rank.

Research shows that stocks carrying the best growth features consistently beat the market. And for stocks that have a combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy), returns are even better.

Here are three of the most important factors that make the stock of this maker of software that automates companies' technology operations a great growth pick right now.

Earnings Growth

Earnings growth is arguably the most important factor, as stocks exhibiting exceptionally surging profit levels tend to attract the attention of most investors. And for growth investors, double-digit earnings growth is definitely preferable, and often an indication of strong prospects (and stock price gains) for the company under consideration.

While the historical EPS growth rate for ServiceNow is 52.7%, investors should actually focus on the projected growth. The company's EPS is expected to grow 28.6% this year, crushing the industry average, which calls for EPS growth of 6.7%.

Cash Flow Growth

While cash is the lifeblood of any business, higher-than-average cash flow growth is more important and beneficial for growth-oriented companies than for mature companies. That's because, growth in cash flow enables these companies to expand their businesses without depending on expensive outside funds.

Right now, year-over-year cash flow growth for ServiceNow is 33%, which is higher than many of its peers. In fact, the rate compares to the industry average of -13.4%.

While investors should actually consider the current cash flow growth, it's worth taking a look at the historical rate too for putting the current reading into proper perspective. The company's annualized cash flow growth rate has been 33.5% over the past 3-5 years versus the industry average of 9.1%.

Promising Earnings Estimate Revisions

Beyond the metrics outlined above, investors should consider the trend in earnings estimate revisions. A positive trend is a plus here. Empirical research shows that there is a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

The current-year earnings estimates for ServiceNow have been revising upward. The Zacks Consensus Estimate for the current year has surged 4.2% over the past month.

Bottom Line

ServiceNow has not only earned a Growth Score of B based on a number of factors, including the ones discussed above, but it also carries a Zacks Rank #2 because of the positive earnings estimate revisions.

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

This combination indicates that ServiceNow is a potential outperformer and a solid choice for growth investors.

Zacks Investment Research