January 2nd, 2023 | 08:07 CET
Amazon, Aspermont, TeamViewer - Which stock will take off fastest in 2023?
Table of contents:
"[...] In Canada, there is $1.75 of debt for every dollar of disposable income - and that was true even before the pandemic. [...]" Karim Nanji, CEO, Marble Financial
Amazon - Will cost-cutting help?
For a long time, Amazon was a darling of investors. But Amazon stock has lost half its value in the post-pandemic period due to rising interest rates and slowing revenue growth. Despite doubling sales to USD 502 billion over the past four years and significantly increasing operating cash flow, the Company is back in the share price regions of 4 years ago. As a result, management has begun to cut costs. Ten thousand employees have been laid off, warehouses have been closed, and some business units have been exited. However, with its focus on growth industries such as e-commerce and cloud computing, Amazon is well-positioned for the future.
It is questionable how things will continue with Alexa because, according to Business Insider, the area will lose around USD 10 billion. Amazon needs a clear business model. The Echo speakers have been selling, but it is unclear how the system will make money in the long term. As a customer thinking of buying an Alexa model, these uncertain future prospects could be a reason to instead invest in another system like Google Assistant. CEO Andy Jassy is reportedly no friend of the system. Therefore, high savings have been made in this area. Whether these are enough to get into the profit zone may be doubtful.
In the future, Amazon will experience slower sales growth in the long term. Still, there is potential for the Company to strengthen margins and boost profits through its cloud computing and digital advertising businesses. The stock has been on the decline since mid-November and is currently priced at USD 84. If the support level at USD 80 does not hold, it could go down to USD 65 again. The mood could hardly be worse at the moment. It is a buy when no one else wants the share.
Aspermont - Still growing in 2022
Aspermont is a leading media services provider to the global commodities industry based on delivering high-quality content to a global subscriber base. The Company has established itself as a global provider over the past 20 years, with brands such as Mining Journal and Mining Magazine delivering high-quality content to the mining industry. Today, Aspermont is the leading media services provider to the global mining and energy sectors, with a growing presence in agriculture. Subscriptions have been increasing for 25 quarters, even in the midst of the COVID-19 pandemic. That demonstrates the strength of the Content-as-a-Service model. However, the Everything-as-a-Service model includes two other components: the Skywave data platform, which is constantly evolving and optimizing products or processes, and B2B services, which address customers' marketing needs.
The figures for the last fiscal year, which ended on September 30, demonstrate the resilience of the business model despite all crises. Revenue grew by 17% to AUD 18.7 million and gross profit by 15% to AUD 12 million, with margins of 64%. EBITDA even increased by 40% to AUD 2.3 million. Cash on hand at year-end was AUD 6.6 million, and there was no long-term debt. Net cash increased by 42% to AUD 4.7 million. In order to cope with the growth, the number of employees was increased by 10%. 75% of revenue now represents recurring revenue, compared to 70% in the previous year. The live events business successfully resumed in the 2022 financial year, generating over AUD 2 million in revenue.
Managing Director Alex Kent commented, "As previously forecast, FY2022 was an excellent year for Aspermont across the board. Given the challenging global conditions, our consistent growth confirms the resilience of our business models and management to deliver progress regardless of the financial environment." The stock has been consolidating since September 20 and is currently trading at AUD 0.018, giving it a market capitalization of about AUD 43.5 million. Thus, the stock is favorably valued, and further growth fantasies are available with the Fintech Blu Horseshoe. In addition, all content is to become multilingual, and the old print editions are to be digitized.
TeamViewer - A block from the leg
TeamViewer is pioneering the vision of global online collaboration and remote support. With the outbreak of the COVID-19 pandemic, the Company's stock price skyrocketed in June 2020 as companies quickly transitioned to remote work and needed quick solutions. Amid the endemic situation and some management mistakes, such as a high-dollar advertising deal with Manchester United, the share price fell as low as EUR 7.67 by early October. On December 16, there was a positive pre-Christmas announcement for shareholders. Management reached an agreement with Manchester United on an early withdrawal from the jersey sponsorship contract.
Instead of the rumoured EUR 50 million, only a single-digit million amount is to be paid. The condition is that Manchester United finds a new main shirt sponsor. That would relieve the Company of a significant cost block, which should positively impact profits. Operationally, things are also going well, as a look at the latest quarterly figures shows. Billings rose by 15% to EUR 144.6 million. For the first 9 months, the increase is 13%. The 42% adjusted EBITDA margin stands out. Here, too, there is an increase of 8% compared with the previous year. At the same time, EUR 286 million in debt was repaid in the first 9 months.
On February 7, the Company will present its figures for the 4th quarter. Then it will become clear whether the targets of EUR 630 million in billings can be achieved. Revenues are expected to be between EUR 565-580 million, and the adjusted EBITDA margin is expected to be in the range of 45-47%. There is disagreement among analysts when looking at the last 3 studies. Barclays advises buy, Morgan Stanley sell, and Goldman Sachs recommends hold. The price targets are between EUR 11 and EUR 14, but the possible exit from the Man United contract was not yet known.
Even though the environment for growth companies has become more difficult due to the interest rate hikes, all three companies presented have good prospects for the future. Amazon has launched a cost-cutting program that, if it works, should lead to profit increases. Aspermont has demonstrated the resilience of its business model and continues to grow. But still, the stock has been punished. As for TeamViewer, one should pay attention to how quickly Manchester United can present a new main sponsor. This would significantly reduce the costs for TeamViewer.
Conflict of interest
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