We’re in the dog days of summer complete with searingly hot temperatures, barbecues, the sound of ice cream trucks roaming the neighborhood, and those awkward tan lines (you know you’ve got them).
Just as temperatures rise, so the stock market slows. Summer is notoriously slow for stocks with the S&P 500 typically going nowhere between July and mid-October.
But while some stay on the sidelines in these hot summer months, there are fast-growing stocks out there screaming to be bought with big news on the way. News that could kick them into an even higher gear.
Here’s what you need to know about 3 such stocks.
Tableau Software (NYSE: DATA)
You may not have heard of this stock, but Tableau Software (NYSE: DATA) is up a whopping 57% this year.
Tableau Software is a major player in the business intelligence market, an increasingly competitive space. It competes to some degree with big names like Microsoft (NASDAQ: MSFT) and Oracle (NYSE: ORCL), as well as smaller names like Domo (NASDAQ: DOMO) – which recently went public.
The company has been growing revenue at nearly 40% compounded annually for the past five years driven by a strong customer base, and is projected to grow revenue by at least 11% this year and by 15% in 2019.
Amidst the growing competition in the space, Tableau has been spending on R&D in an effort to differentiate its product offerings and increase market share. It also acquired Empirical Systems—an MIT Artificial Intelligence startup—which, with the help of its unique analytics engine, automates data modeling which helps customers save considerable time and money.
The addition of the Empirical Systems platform helps users gain deeper insights into their data without the need for technical expertise by testing various conditions automatically while also predicting trends to identify the factors responsible for existing issues. The acquisition is also expected to expand Tableau’s customer base, and will help Tableau compete against larger business intelligence providers like Microsoft and Amazon (NASDAQ: AMZN).
The big catalysts for Tableau this summer are this month’s second quarter earnings report, and upcoming investor conference. The company is expected to see its free cash flow return to growth in the second half of this year as its subscription revenue increases to 70% compared to 28% in 2017.
KeyBanc analyst Brend Bracelin upgraded the stock to Overweight in a note Tuesday. His price target for the stock is now $125 – nearly 16% higher than today’s prices.
Roku (NASDAQ: ROKU)
Roku (NASDAQ: ROKU) has taken the streaming set-top box market by storm in the last few years and has seen tremendous growth as consumers ditch traditional cable packages for more flexible streaming options.
Its simple devices affordably turn any television into a web-connected device capable of streaming digital content from Netflix, Amazon, Pandora, and then some. And despite some big names offering similar devices in the same space—Amazon’s Fire TV Stick, Apple TV, and Google’s Chromecast—Roku has a commanding lead, controlling 37% in market share in the space.
KeyBanc said recently of Roku, “we expect earnings and guidance to be the next major catalysts in the short term.” They also added that the company’s Roku Channel—which is already seeing rapid adoption—looks poised to become a “first choice” means of connecting viewers to video among an ocean of other options.
Roku’s sales are on track to grow 36% this year, and 32% in 2019.
Netflix (NASDAQ: NFLX)
Netflix (NASDAQ: NFLX) needs no introduction.
The streaming giant’s top line is driven by its impressive growth in subscribers, which supports the company’s aggressive reinvestment into original content – delivering popular series like Stranger Things, The Crown, and 13 Reasons Why.
Last quarter, the company added 7.4 million streaming subscribers, crushing management’s guidance for 6.4 million.
In its second quarter earnings call—which is scheduled for Monday, July 16—the company will have a high bar to live up to, which if met, could send the stock soaring to even higher highs.
The management is guiding for second quarter revenue to rise 41.2% year-over-year, and growth in international subscribers to rise 41% over the same quarter last year to 68.7 million.
Netflix also expects its operating margin to be 12% for the second quarter, and investors should watch to see if the company will raise its outlook for the full year’s operating margin which if revenue growth continues to surpass management’s guidance, its operating margin will likely benefit.