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  • Datadog (DDOG) Is a Winner, but the Stock Is Fairly Valued Here, Says 5-Star Analyst

    Datadog (DDOG) Is a Winner, but the Stock Is Fairly Valued Here, Says 5-Star AnalystFate is a cruel mistress, the saying goes. But how about turning the phrase on its head? Might fate be a welcoming friend, too? That’s certainly the case during COVID-19. As some companies’ unfortunate line of business has dictated a struggle to make it through the pandemic, some are inherently well set up to benefit.Cloud based services and data focused companies, for example. Or specifically, Datadog (DDOG). The SaaS data analytics specilaist’s performance has been impressive. Since the turn of year, DDOG shares have appreciated by 82%, whilst successfully navigating through the pandemic storm. And unlike many companies struggling with recent Q1 reports, DDOG just delivered the goods. So, where has it all gone right for DDOG?As befits a data crunching platform, it’s all in the numbers. In the first quarter, the company reported revenue of $131.25 million, up by 87.4% year-over-year and easily beating the Street's call for $117.7 million. Q1 Non-GAAP EPS of $0.06 came ahead of the estimates by $0.07, turning a profit against expectations.Bucking the trend to shy away from guidance, in Q2, DDOG expects revenue to come in between $134 to $136 million (consensus calls for $126.31 million) and for FY20 , the company projects revenue in the range of $555 to $565 million, again ahead of consensus, which calls for $534.50 million.Even though they've yet to encounter any pressure, anticipating COVID-19 headwinds, management is preparing for some 2Q/3Q retention rate pressure and deal slippage.Oppenheimer analyst Ittai Kidron expressed great satisfaction with the results and steady execution, and said, “Even with management budgeting for some 2Q/3Q COVID-19 pressure on retention rate/churn, they were still comfortable raising CY20 guidance given the robustness of the existing deal pipeline. Management's also doubling down on aggressive investment, positioning for long-term gains.”Despite the strong report, though, Kidron argues the upside is “fairly reflected in Datadog's premium valuation.” However, the 5-star analyst believes “investors with longer investment horizons (+18 months) can buy into the story.” Accordingly, Kidron keeps his Perform (i.e. Hold) rating as is, though has not set a price target. Kidron is one of the top analysts on Wall Street covering technology. His picks average a 32% one-year return, and he's ranked in the top 10 out of over 6,500 analysts, according to TipRanks database.When evaluating DDOG’s prospects, the Street is almost split down the middle. 7 Buys and 6 Holds add up to a Moderate Buy consensus rating. However, the company’s on-going share appreciation means the current average price target of $61.50, implies downside of 11%.Read more: * 3 “Strong Buy” Dividend Stocks That Look Great After Earnings Beat * 2 Cruise Line Stocks to Bet on After the Coronavirus Crisis (And 1 to Avoid) * 3 Stocks Needham’s Top Analysts Are Raving About

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  • Why diversification is important and how to diversify your portfolio with ASX shares

    While it might be tempting to load up a portfolio full of the hottest stocks like Afterpay Ltd (ASX: APT) and Xero Limited (ASX: XRO), having too much exposure to one particular sector can be a bad thing for a portfolio.

    You only need to look at the travel sector to see this. Through no fault of their own, the shares of Flight Centre Travel Group Ltd (ASX: FLT) and Webjet Limited (ASX: WEB) have been crushed in 2020 because of the pandemic.

    If you had a portfolio with significant weighting to the travel sector, you would be severely underwater right now compared to those with more balanced portfolios.

    With that in mind, here are two top ASX shares you could diverse your portfolio with:

    Betashares Nasdaq 100 ETF (ASX: NDQ)

    The first option for investors to consider is the Betashares Nasdaq 100 ETF. As its name implies, this exchange traded fund gives investors exposure to the famous Nasdaq 100 index. These are 100 of the largest, non-financial businesses on the NASDAQ exchange. There are countless household names included in the fund such as Amazon, Apple, Costco, Netflix, Starbucks, and video conferencing provider Zoom. Given the positive outlooks for the companies on the index, I feel the exchange traded fund offers strong potential returns as well as diversity.

    BHP Group Ltd (ASX: BHP)

    If you’re one of the many investors that doesn’t have any exposure to the resources sector, then doing so could be an easy way to bring some diversification to your portfolio. My favourite option in the sector is BHP, just ahead of fellow mining giant Rio Tinto Limited (ASX: RIO). I like BHP due to its diverse and world class operations, their low costs, its strong balance sheet, and the bumper free cash flow it generates. The latter is likely to lead to generous dividend payments over the coming years.

    And here are five dirt cheap shares which could be great additions to a balanced portfolio right now. They have just been given buy ratings.

    5 cheap stocks that could be the biggest winners of the stock market crash

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    Returns as of 7/4/2020

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    Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BETANASDAQ ETF UNITS and Webjet Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO and Xero. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

    The post Why diversification is important and how to diversify your portfolio with ASX shares appeared first on Motley Fool Australia.

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  • Up 140% since March: the ASX airline share flying under the radar

    share price higher

    The Regional Express Holdings Ltd (ASX: REX) share price has more than doubled in the past 7 weeks, surging more than 140% from its low in late March. The positive price action dwarfs the recovery seen in the share price of its larger competitors Qantas Airways Limited (ASX: QAN) and Virgin Australia Holdings Ltd (ASX: VAH) over the same period.

    Here’s why the Regional Express share price is flying and a closer look at whether Rex could be a long-term buy.

    A potential three-airline market

    Securities in Regional Express (Rex) entered a trading halt yesterday, following an article in the Australian Financial Review (AFR) that suggested the airliner was looking to expand its services. According to the article, Rex is looking to capitalise on the fragmented domestic market by investing $200 million into capital city services.

    According to the report, the company plans to lease a fleet of 10 aircraft and hire new pilots, crew and ground staff. The new services offered by Rex will compete directly with Qantas, its subsidiary Jetstar and Virgin Australia as a budget and full-service airline.

    How has Rex performed during the pandemic?

    Regional Express operates exclusive services to 60 regional destinations in Australia and currently has a fleet of 60 Saab aircraft. The company has been able to maintain minimum services to regional Australia thanks to funding arrangements with both federal and state governments.  

    The company was founded in 2002 and has made an operational profit every year since 2004. An interesting note from the article in the AFR is that Rex’s cumulative net profits over the past 6 years have exceeded the combined earnings of both Qantas and Virgin over the same period.

    Despite the company’s resilience and consistent profitability, Rex has not been spared the impact of the COVID-19 pandemic. The airline withdrew its profit guidance in mid-March citing the uncertain trading environment. The company also released an open letter to the Deputy Prime Minister, which stated that regional operators like Rex could only last for a few weeks based on reserves without government assistance.  

    Should you buy?

    Given the distressed state of the domestic airline sector, Regional Express has found an opportune moment to enter the market. Rex currently dominates regional services, covering 85% of the routes offered. However, the move from being a purely regional airline to servicing capital cities could be interesting. If the company manages to build on its existing infrastructure and maintain a lower cost base, it should be competitive.

    I think the prospect of Rex expanding its services would be great for consumers and potentially shareholders as well. I think a prudent strategy for investors would be to keep any eye on the sector and Rex in particular before making an investment decision.

    The Rex share price could have great long-term potential. Here are 5 more stocks that could boom in 2020 and beyond.

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    Our experts at The Motley Fool have just released a FREE report detailing 5 shares you can buy now to take advantage of the much cheaper share prices on offer.

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    Returns as of 7/4/2020

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    Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

    The post Up 140% since March: the ASX airline share flying under the radar appeared first on Motley Fool Australia.

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