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Copyright © Profits Run, Inc. Page 1 of 19
DISCLAIMER: Stock, forex, futures, and options trading is not appropriate for everyone. There is a
substantial risk of loss associated with trading these markets. Losses can and will occur. No system or
methodology has ever been developed that can guarantee profits or ensure freedom from losses. No
representation or implication is being made that using the information in this special report will generate
profits or ensure freedom from losses. Risks also include, but are not limited to, the potential for changing
political and/or economic conditions that may substantially affect the price and/or liquidity of a market. The
impact of seasonal and geopolitical events is already factored into market prices. Under certain conditions
you may find it impossible to liquidate a position. This can occur, for example, when a market becomes
illiquid. The placement of contingent orders by you, such as “stop-loss” or “stop-limit” orders will not
necessarily limit or prevent losses because market conditions may make it impossible to execute such
orders. In no event should the content of this correspondence be construed as an express or implied
promise or guarantee that you will profit or that losses can or will be limited in any manner whatsoever. Past
results are no indication of future performance. Information contained in this correspondence is intended
for informational purposes only and was obtained from sources believed to be reliable. Information is in no
way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are
attempted. Rev #2-20200318
Copyright © by Profits Run, Inc.
All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any
means, electronic, or mechanical, including photocopying, recording, or by any information storage and
retrieval system.
Published by:
Profits Run, Inc.
28339 Beck Rd Suite F6
Wixom, MI 48393
www.profitsrun.com
Copyright © Profits Run, Inc. Page 2 of 19
Dear Investor, We’re standing on the precipice of what could be a severe economic downturn. And that’s cause for fear among most investors. But there are always hidden gems to be found even when things are looking bleak. Case in point: The Great Crash of 1929 is widely considered the worst stock market crash of all time. The overall stock market cratered almost 90%! And the markets didn’t reach their pre-crash levels again until over 25 years later. But Coca-Cola (KO) didn’t march with the rest of the market. Sure, share prices dipped during the crash of ’29. But Coca-Cola hit brand new highs with 2 years! In 1987, on “Black Monday” the markets crashed again. This time kicking off a recession that lasted years. But had you purchased shares of Microsoft and held on until today you’d be up over 100,000% today. These are NOT isolated incidents. These kinds of things happen in EVERY market crash. Copyright © Profits Run, Inc. Page 3 of 19
In 2001 when tech stocks crashed, a company called Hollywood Entertainment (HLYW) soared 1,324% thanks to increased movie rentals. And even in 2008 when it felt like the sky was falling, Valeant Pharmaceuticals (VRX) skyrocketed 91% while the general market got cut in half. And so even now while things may be looking bleak, there are still opportunities to be had and potential profits to be found. To help you see the opportunities available to you even in times of economic recession, the Profits Run team has located five stocks primed to soar in the coming years. One word of warning before you dive in: Nothing in this report is to be considered investment advice or recommendations. You should do your own research and draw your own conclusions before buying or selling any investment vehicle of any kind. Let’s dive in… Copyright © Profits Run, Inc. Page 4 of 19
Stock #1: The Future of Work
Zoom Video Communications (Nasdaq: ZM)
Working off-site has been a luxury
a minority of employees have
enjoyed for some time now. Zoom
offers the necessary technology
that enables business to stay
connected with its employees.
With the onset of COVID-19
though, those skeptical of this
business trend were forced to
adapt as the federal and local
governments restricted our movement and traditional business
practices. Zoom was poised to be a beneficiary of that trend.
There’s no doubt that the coronavirus outbreak catapulted this
company forward, and investors pounced on shares as demand for
Zoom’s services ballooned.
"Over the night, almost everyone really [understood] they
needed a tool like this." CEO Eric Yuan
The numbers paint a very flattering picture of Zoom's place in the
market. Since its IPO in April 2019, shares have rocketed upward
over 66%, which is impressive when compared to the negative 4%
Copyright © Profits Run, Inc. Page 5 of 19of the broader market. Similarly, Zoom's stock soared 37.6% in February 2020 compared to the S&P decline of 8.2%. Zoom's expectations for the current year reflect a continued strength. The company forecasted revenue growth of 64% in the first quarter, year over year, and non-GAAP net income to nearly triple. This forecast looks reasonable when considering that the number of customers providing $100,000 or more in revenue over the previous 12-month period grew 86% compared to the same period in the prior year. The sudden push for distance working caused by COVID-19 further buoyed Zoom's forecast, with revenue exploding 78% year over year in the week of March 8-14 alone. The company's current quarterly estimates are expected to soar over 233% from 2019. Earnings expectations are expected to be $.41 per share for 2020, representing a 17.14% increase over the prior year. Over 26 million Americans, about 16% of the workforce, spend some of their time working remotely according to the U.S. Bureau of Labor Statistics. “A conceived loss of productivity has been the fear and driving force behind the roughly 44% of companies not embracing the trend” according to Owl Labs, a Boston-area company that makes video-conferencing devices and collects data on remote work.” However, businesses are likely to reevaluate this perspective in the wake of the coronavirus outbreak, and Zoom CEO Eric Yuan thinks this “could lead to a fundamental, permanent shift in how people work.” Copyright © Profits Run, Inc. Page 6 of 19
Zoom finds itself well positioned with what may become a very
real paradigm shift in the way America conducts business, and
investors would be wise to consider the potential opportunity
offered by the company.
Stock #2: The Future of the Internet
Fastly (NYSE: FSLY)
As the internet
expands its user
base and
bandwidth
speeds improve,
the demand for
digital content
increases.
Customers are
demanding faster web page loading, seamless streaming, and
instant inventory updates on e-commerce sites.
Fastly provides a cloud computing platform commonly known as
a Content Delivery Network, or a CDN, that sits on the “edge” of
the network and enables businesses to meet their customers’
demands. The CDN can extend a company’s network globally by
establishing servers anywhere. What differentiates Fastly from its
competitors is its heavy investment in its edge cloud platform.
Copyright © Profits Run, Inc. Page 7 of 19That investment is paying off, as revenue grew 44% year over year in the company’s last quarter, and they have 288 enterprise customers spending on average $607,000 annually. Arthur Bergman founded Fastly in 2011 because CDNs were “too slow, costly to maintain and difficult to manage.” Fastly has spent the last eight years developing its edge cloud platform and developing relationships with customers. It went public in May of 2019, and its early investment is seemingly paying off as revenue growth is expanding, large enterprise customers are increasing, and existing customers are spending more. Fastly’s platform allows its customers to geographically retrieve or cache information from applications which are closer to its end user than traditional cloud datacenters. As a result, information isn’t required to travel as far, thus enhancing speed, reliability, and costs. This architecture also reduces the amount of data required to stream or deliver content as compared with the use of more traditional providers like Amazon Web Services, Microsoft Azure, or Google Cloud Platform. Today’s fastest growing industries are taking advantage of the platform's speed and flexibility. Fastly powers over two billion searches annually on Kayak’s travel site while also auto-updating inventory and pricing. Spotify streams customized playlists to enthusiasts in 78 countries, and the New York Times relies on Fastly to serve 130,000 viewable videos per second. Copyright © Profits Run, Inc. Page 8 of 19
In 2018, the company’s revenue grew 38% year over year. Specifically, Fastly’s revenue increased 34% in the second quarter, 35% in the third quarter, and 44% in the fourth quarter of 2019. The Dollar-Based Net Expansion Rate, an indicator of what current customers spend in subsequent quarters, was 132% in the second quarter of 2019, 135% in the third quarter of 2019, and 136% in the fourth quarter. For tech companies anything over 120% is considered excellent. Gross margin was 56.7% in the fourth quarter of 2019, up from 56.6% the previous year. As new products are introduced investors can anticipate improved gross margins. Product innovation remains central to the company’s focus. Fastly announced the launch of Compute@Edge in November of 2019, a product that allows greater security, enhanced logic, and better performance for developers. In January 2020 they launched Cloud Optimizer, which enables commerce and high-tech companies the ability to take real time control of their content delivery network infrastructure. This continued innovation indicates that management is executing its plan well. Fastly’s focus on innovations that answer their customers’ needs for an enhanced digital experience keeps the company poised for positive revenue growth and better gross margins. These qualities make Fastly a promising investment to consider. Copyright © Profits Run, Inc. Page 9 of 19
Stock #3: The Future of Payments
Square NYSE: (SQ)
Square Inc. was
founded in 2009 as a
dongle plugin for smart
phones and tablets that
enabled the user to
accept digital, credit,
and debit card
payments. It
revolutionized the industry by putting an otherwise expensive
service for smaller retailers within easy reach of the masses.
In just over a decade there are many competitors, yet Square
continues to dominate by growing annual revenue by 261% since
going public in 2015. The key to its position lies in the fact that it
has transformed itself from a simple payment processing vendor
into a “cohesive ecosystem that helps sellers start, run, and grow
their business.”
Square rapidly expanded its services to include marketing,
payroll, and loyalty program management. However, the services
that had the most impact were its Instant Deposit and Square
Capital.
Instant Deposit allows businesses to receive money from sales
instantly for a 1.5% surcharge, a process which usually takes one
to two business days.
Copyright © Profits Run, Inc. Page 10 of 19Square Capital offers sellers access to loans from Square’s dashboard and access to the cash the following business day. Loan payments are deducted from sales generated via Square purchases. Seller data is leveraged to keep loan loss rates under 4%. In the fourth quarter of 2019, Square Capital facilitated loans in excess of 97,000, totaling $671 million and representing a 42% increase year over year. Square has lent roughly $6 billion to over 300,000 businesses to date. Customers can spend, send, and invest with Square’s Cash App digital wallet. Purchasing bitcoin as well as buying and selling fractional shares of stocks with no commission fees are additional features offered by the app. Cash App boasts 24 million monthly active users, an increase of 60% from the end of 2018. Investors should note that Square is growing its revenue at a fast rate and getting closer to profitability. Cash App netted its highest number of new active customers ever in December 2019. Square generated $183 million in revenue in the fourth quarter of 2019, representing a 96% increase over the same period a year ago. It also processed over $28 billion in gross merchandise volume. Instant Deposit and Square Capital offer higher margins, and this segment's revenue rose to $281 million in the fourth quarter, a 45% increase year over year. Square’s GPV, tracking its core business, rose to $28.6 billion and showed a 25% increase over the previous year's fourth quarter. Copyright © Profits Run, Inc. Page 11 of 19
The global digital payments market is expected to grow at a solid pace over the next several years. According to Grand View Research, digital payments will enjoy annual growth of about 18% between 2019 and 2025 to reach $130 billion, giving Square enough runway to grow its top line rapidly. There has been a speedy increase in adoption of mobile payments technology, especially in developed markets. Furthermore, government regulations around the world have made it easier for companies to gain traction among businesses and consumers. Square continues to be optimistic about its Cash App, which has been a key driver of top line growth. Monthly active users for this app grew from 15 million in 2018 to 24 million in 2019, up 60% year over year. This expansion was driven by the investing feature, which has experienced the fastest adoption among any of the company's products within the cash ecosystem. Last year, Square also launched several new marketing campaigns around the world to expand its reach among businesses. The company has successfully scaled and expanded its product portfolio to include bitcoin and equity investments. As a result, Cash App revenue soared 147% during the fourth quarter as full- year revenue cleared $1 billion dollars, and gross profit for the business was up 104% during the quarter as well. EBITDA for 2020 is projected to be between $500 million and $520 million, up from $417 million in 2019. Square is well positioned to address a rapidly expanding market with a diverse product portfolio. Copyright © Profits Run, Inc. Page 12 of 19
There is substantial growth potential for international sales, as
they represent a very small portion of revenue at this time, and in
the emerging markets where credit is in short supply. For long
term investors Square could be an excellent bet.
Stock #4: The Future of Music
Spotify (NYSE: SPOT)
When a CEO is
being compared to
Reed Hastings
from Netflix, Tobi
Lutke from
Shopify, and Elon
Musk from Tesla,
it’s clear that they
are someone
special.
Daniel Ek started Spotify in 2008 with the vision to “unlock the
potential of human creativity by giving a million creative artists
the opportunity to live off their art and billions of fans the
opportunity to enjoy and be inspired by those creators.”
In the last year management grew Spotify’s platform outside the
traditional music confines to include podcast companies Anchor,
Gimlet, and Parcast. They ventured into the sports arena by
acquiring The Ringer, described by Ek to be “the next ESPN.” The
Copyright © Profits Run, Inc. Page 13 of 19number of streamed podcast hours exploded by 200% year over year, which is driving listener retention and can be viewed as an excellent indicator of the overall health of the platform. Spotify is the world's most popular audio streaming subscription service, offering 50 million tracks which include 700,000 podcast titles. The platform boasts 271 million monthly active users and 124 million paid subscribers. From its inception, Spotify revolutionized the music industry with its “access-based” model of “on-demand” streaming. It reshaped and disrupted an industry of pre-planned radio broadcasts and transaction-based buy and own listening. Spotify currently embraces a two-sided marketplace, with one serving music lovers and the other serving the creators of music and podcasts. Management strives to enable one million artists to live off their work as it generates revenue via two separate streams, one through ads and the other through subscriptions. Spotify’s goals are to be more efficient and improve unit economics. The expansion into podcasts, sports, and the creator marketplace while also improving user experience comes at a price, as reflected in its stock price. However, it does set the company up for long term success though. Ek stated: “We are investing in podcasts and other forms of alternative and spoken-word content to complement the music library available through our platform. More than 16% of our Monthly Active Users as of December 31, 2019 have consumed this kind of Copyright © Profits Run, Inc. Page 14 of 19
content. We believe offering a more diverse selection of content
will lead to a more enriching experience and higher user
engagement.”
The global music industry experienced a dramatic decline in
revenue of 40% between 1999 and 2014, declining from $23.8
billion to $14.3 billion. Piracy was largely blamed for this decrease
as it made success difficult for all but the top stars. The shift to
on-demand fostered a return to growth of 4% to 9% during the
years 2015 and 2018. Total music industry revenue for 2018 was
$19.1 billion.
Since the company was founded in 2008 Spotify has paid $16.7
billion in royalties to artists, music labels, and publishers.
Licensing expenses grew by 30% in the past year, but this figure
should stabilize as Spotify is now one of the largest revenue
growth engines for artists and labels in the industry.
Revenue was up 24% in the fourth quarter of 2019 year over year,
and annual revenue saw a 28% uptick. Monthly active users grew
by 31% in the fourth quarter of 2019. Paid subscribers account for
88% of revenue, and the number of subscribers has grown 29%.
Ideally, the percentage of revenue from paid subscribers should
be in the high 20s to low 30s, which would foretell an actual
decrease in subscription revenue but would be balanced by an
increase in ad revenue.
Great content and improving user experience, lowering customer
acquisition costs, and increasing lifetime customer value is the
foundation created by Spotify. Investing in Spotify is an
investment in a growing platform led by a genuine founder
Copyright © Profits Run, Inc. Page 15 of 19focused on innovation and growing the business well beyond the
next quarter.
Stock #5: The Future of Search
Yext (NYSE: YEXT)
The way that consumers use the
Internet to search for information on
companies, brands, and services is
continuously evolving.
The rise of voice-activated digital
assistants, such as Alexa and Siri, is
one of the latest developments, and
their fast adoption points to the future
of customer engagements.
Yext, “the next Yellow Pages,” intends to provide structure within
this developing market by ensuring that a business has direct
control over the information accessed by a digital assistant or
other aggregator.
As artificial intelligence continues to improve search engines and
their results, consumers are able to ask more complex questions,
and they expect accurate, personalized answers.
Copyright © Profits Run, Inc. Page 16 of 19Yext aims to help companies supply these answers by providing a knowledge graph platform. This platform allows businesses to directly consolidate and control their public-facing information which, in turn, keeps aggregators like Alexa and Google up-to- date and accurate. Furthermore, the platform also provides businesses with a knowledge graph of potential answers to the questions posed by a consumer, and this graph makes it easier for a company to give a more personalized result. Yext has positioned itself as a middleman between a company’s data and the apps/aggregators that want to access it, opening a new realm of “intent marketing.” Digital marketing is an arms race in which companies can’t afford to fall behind. Yext intrinsically changes the way companies provide and update their information, and their subscription model makes it difficult for a business to stop using Yext. Yext enables a company to update its information once and have that update automatically accessible to every marketing platform they use. This process is much more efficient than manually updating every Facebook page and Google Maps card. What makes Yext so difficult for a company to stop using is that once their subscription runs out, all of their information reverts to the way it was pre-Yext, creating a strong incentive for continued use. Furthermore, Yext has put themselves at the head of this new market by having their platform be integrated with the Apple iPhone, Google Android, and Amazon Alexa. Yext’s subscription model charges businesses for the use of its platform, which includes various product tiers such as Listings, Pages, and Answers. Subscriptions are priced according to customer size, ranging from $200 per year for small businesses to Copyright © Profits Run, Inc. Page 17 of 19
$1 million or more for larger companies. In the latest available highlights, Yext’s customer count (which excludes small businesses and third-party resellers) grew 38% year-over-year to over 1900. This customer growth is also reflected in its revenue. For the fiscal year ending January 2020, Yext reported revenue of $298.8 million, which is a 31% increase from the $228.3 million of 2019. Additionally, their international revenue saw impressive growth in fiscal year 2020 as it increased 72% year-over-year to $53 million. All indicators show that Yext expects continued growth moving forward, as they have recently opened a Tokyo- based branch. The importance of digital marketing will continue to be a major concern for businesses who want to keep their customer-base informed and engaged. Yext has distinguished itself by placing its platform at the center of this interaction. The current lack of competitors paired with its subscription model make Yext likely to continue growing and influencing the market. Although there is a chance that sales could wane with time, the sheer potential for market opportunity makes Yext a high- risk/high-reward option that investors should definitely consider. Copyright © Profits Run, Inc. Page 18 of 19
Final Thoughts
Keep in mind the most dangerous phrase that any investor will
ever utter: “This time it’s different.”
Don’t allow yourself to fall victim to that line of thinking.
The markets will rise, the markets will fall. There will be times of
boom and times of bust. But underneath it all, there will always
be savvy investment opportunities ready and waiting for those
who know where to look.
Good Trading,
The Profits Run Research Team
The Strange "Email Profit Signal"
That Predicts Big Market Moves...
For the full story, visit:
www.profitsrun.com/marketmoves
Copyright © Profits Run, Inc. Page 19 of 19You can also read
