I previously discussed my top stock pick for 2020, which is a biotechnology name.
Now, I am now going to start talking about several other stocks that I believe will do well in the year ahead.
First up is Datadog (DDOG) , which came public in September at an offering price of $27. Cisco (CSCO) attempted to acquire the Datadog before it went public but it rejected the offer and is now substantially higher than the offering price.
Datadog's first report as a public company was quite strong and it increased guidance, although it appears that management left plenty of room for a solid beat. I believe that investors will be anticipating that report and will bid the stock up into the announcement in March.
The company's technology is complex and I don't pretend to understand it very well. The essence of its business is that it allows companies to monitor how well their cloud environment is operating.
Datadog is a leader in a niche known as "Kubernetes," according to Barron's. Kubernetes is the Greek word for helmsman or pilot. It is a way for an application to be scaled across a number of different servers, clouds or operating systems. A good example is Gmail, which is Kubernetes so that a billion users can use the same application.
Datadog is in the right niche and management seems to be lowballing guidance. It is in a good position to be a top momentum name. This is still primarily a revenue play, but Datadog is expected to double its revenues to over $500 million in 2020, which would be 43% growth. With that sort of operational momentum, the stock should follow.
I believe that this story is being quickly discovered, which is why I also named DDOG as my Stock of the Week.
I have several other stocks that I believe will be top picks in 2020 and I discuss them soon.
