High-growth tech stocks including Alteryx (AYX), Crowdstrike (CRWD), and RingCentral (RNG) are leading gains in the tech sector today. While Alteryx has risen 4.4%, Crowdstrike and RingCentral have gained 6.4% and 6.3%, respectively, today. Let’s see what’s driving these stocks higher.
Alteryx bounced back
Alteryx stock is trading at $116.16, which is 21.4% below its record high of $147.79. The stock lost almost 25% in September. Investors were concerned about sky-high valuations for Alteryx and its peers.
Despite the recent pullback, Alteryx has returned 97.6% year-to-date. The stock has gained 646% since its IPO in March 2017. Alteryx is valued at $7.08 billion or 18.7x its 2019 sales.
The company will likely post a non-GAAP profit in 2019. Analysts expect Alteryx to increase its sales 83.4% to $374.66 million in 2019 and 33.1% to $498 million in 2020. The company’s EPS will likely grow 2,500% to $0.48 in 2019 and 60.4% to $0.77 in 2020.
In comparison, Alteryx stock is trading at a forward PE ratio of 151x. Analysts have a 12-month average target price of $138.75 for the stock, which is 19.2% higher than the current trading price.
Crowdstrike and RingCentral gained big
Crowdstrike investors have had a volatile few months, which is expected from IPO stocks. The stock was publicly listed in June and closed trading $58 on June 12, which was significantly higher than its IPO price.
The stock rose to a high of $101.88 in August and then fell to $53.46 by the end of September. Crowdstrike is valued at $13.9 billion or 31x its 2019 sales.
The company is still posting a non-GAAP loss. Crowdstrike probably won’t be profitable at least until 2023. Analysts expect the company to increase its sales 80% to $450 million in 2020 and 42.7% to $642.55 million in 2021. Analysts have a 12-month average target price of $90.53 for CrowdStrike, which is 34% higher than the current trading price.
RingCentral continued to move higher for the second consecutive day. The stock has gained more than 36% in two days due to its deal with Avaya (AVYA). RingCentral partnered with Avaya last week to provide the latter with exclusive unified communications-as-a-service solutions. The deal will likely be accretive to RingCentral’s earnings and revenues, which increased investors’ optimism.
RingCentral stock is valued at $13.75 billion or 16x its 2019 sales. The company is already posting a non-GAAP profit. Analysts expect RingCentral to increase its sales 30% to $876 million in 2019 and 23.2% to $1.08 billion in 2020.
The company’s EPS will likely grow 1.3% to $0.78 in 2019 and 23.1% to $0.96 in 2020. In comparison, RingCentral stock is trading at a forward PE ratio of 182x.
What’s next for investors?
While Alteryx and Crowdstrike are trading below analysts’ target prices, investors need to remain cautious. The companies’ high valuation multiples will drag the stocks lower in a downturn.
The stock markets will likely be choppy. Expensive tech stocks like Alteryx, Crowdstrike, and RingCentral will likely lose considerable market value. However, Alteryx and other companies’ growth metrics are encouraging. Alteryx is part of the high growth data analytics space, while Crowdstrike is gaining traction in cybersecurity. RingCentral’s market opportunity is also huge.
We identified Alteryx as a stock to buy at major dips. Is the pullback good enough? Not quite.