Tech stakeholders have won out by corporate American extracting a King’s ransom in the form of a favorable stimulus and unwavering government support for the next lucrative explosion upwards in tech shares.
We have moved into a post-industrial capitalistic apocalyptic world for better or worse and I will give you another hot tip – RingCentral, Inc. (RNG).
The company is poised to rise with all corporate tech boats moving forward.
Inside the deep underbelly of U.S. Capitalism 2.0, the financial fallout and response to it mirrors the last crisis of 2008 signaling to investors to buy tech growth stocks and lots of it.
That might be a cynical take of how the cookie is crumbling but just look at the Teflon tech market that shrugs off the unemployed who are standing in food lines.
Then consider that many of the small business loans were front run by the corporate crowd by hijacking almost $900 million in funds allocated to the small business relief program that was meant to go to main street.
It’s a sign of the pecking order of the future and investors must input the new data into their models going forward.
Corporate America value and its economic extraction machine are powering ahead leaving main street behind offering opportunities for tech-savvy investors.
What does this mean? This is demonstrably bullish for the tech sector and could initiate the Golden Age of 5G investing.
Big tech will get bigger and corporate America will lurch out of the coronavirus epidemic positioned the strongest precisely because they have been best, fully funded, and the strongest tech companies have the country’s best balance sheets.
I advise investors to look at tech growth and RingCentral is one of the leaders in this field.
RingCentral is a robust cloud communications company that is at the vanguard of the Unified Communications as a Service (UCaaS) space.
RingCentral has about 2 million users on its platform and according to management is “the last service to be turned off” in this wonky economy that is mostly shut down.
The knock-on effect of the coronavirus is that RingCentral app downloads are up 400% month over month, online meetings on the platform are up over 200%, and messaging is up over 90%.
RingCentral is regarded as one of the originators of the UCaaS market, which projects to grow at a double-digit pace for the next ten years.
Unified Communications as a service (UCaaS) is the concept of integrating enterprise communication services, such as messaging, voice, and video, into one platform and ecosystem.
The company is brilliantly placed to turn rising demand for UCaaS services into real revenues in Q2 and Q3.
RingCentral (RNG) has launched its highly effective RC Video product for meeting applications.
RingCentral Video is bundled across the entire RC Office portfolio for free and preliminary analysis indicates that the product outperforms for basic multi-user video conferencing requirements via the Chrome browser, including screen sharing.
RingCentral is fighting with Zoom to be at the top of the food chain.
The company’s robust cloud communication platform ties together message, call, and video.
The open platform nature allows for easy integrations and strong brand equity.
The stats don’t lie with RingCentral reporting 30%-plus revenue growth in each of the past three years.
The company is growing out of their ears and when you add in a favorable margin profile, this robust revenue growth will lead into equally robust profit growth cycle.
I will assume in my model that the company will grow 20% over the next 10 years with several hundred basis points of gross margin expansion.
If the company can hit these moderate performance targets, I can’t imagine anything other than the stock being much higher than it is today in the future.
Secular tailwinds cannot be understated as the stock is on the verge of surpassing its prior high of $245, making a perfect V-shaped recovery from the nadir of $139, and breaking out as the rest of the economy comes back online.
The almost doubling of the stock can be extrapolated to many other tech growth stocks that have experienced similar price action in the past 45 days.
Slip this one into your portfolio as tech goes from strength to strength.