Earnings season is in the rearview mirror, and the holiday season is afoot. Warnings of a new Covid variant are rocking markets again, as are threats of a tightening monetary policy. The stock market may be uncertain, but there are still plenty of opportunities for savvy investors…
If you’re looking for new ideas, keep reading to see why our writers recommend Teladoc (NYSE:TDOC), Duolingo (NASDAQ:DUOL), AT&T (NYSE:T), MercadoLibre (NASDAQ:MELI) and Zoom Video Communications (Nasdaq: ZM) as top stocks to buy in December.
Omicron short term, disruptor long term
Keith Speights (Teladoc Health): There’s a good chance that the omicron variant will be the most important factor affecting the stock market in December. If that’s the case, Teladoc Health is likely to be one of the biggest winners over the short term.
Teladoc’s shares skyrocketed last year as the COVID-19 pandemic fueled a massive acceleration in the use of telehealth. I don’t think that the widespread lockdowns of 2020 will return. However, as long as there is uncertainty about the omicron variant, Teladoc is likely to benefit.
More than half of the Fortune 500 have signed up with Teladoc. They’ve turned to the company’s virtual care services because of lower costs and greater convenience for patients. Those advantages won’t disappear once the pandemic is over.
Teladoc’s acquisition of Livongo Health puts the company in the driver’s seat in digital chronic disease management. Its new Primary 360 product should make Teladoc an even more formidable competitor in virtual care. Primary360 allows individuals to select a primary care provider that they see virtually, and with whom they can develop an ongoing relationship.
The adoption of virtual care is still only in its early stages. I think that Teladoc could easily deliver a 5X return or more over the next decade.
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Anders Bylund (Duolingo): Language-learning service operator Duolingo (NASDAQ:DUOL) has hardly missed a step in the last three months. The company added a couple of high-powered names to its executive suite and delivered year-end guidance far above Wall Street’s expectations. Sure enough, the stock rose from $120 per share in late August to $202 in the second half of September.
…and then Duolingo fell into Wall Street’s bargain bin. The stock is now back where it was three months ago, and I think the buying window is wide open.
The business is firing on every available cylinder. Subscription revenues rose by 42% year over year in the third quarter. Advertising sales also jumped 34% higher. The company’s “other” revenues, mainly related to in-app purchases, scored a 179% sales boost. And the future looks even brighter. Bookings increased by 57%, indicating a growing trend in subscription-based sales.
That’s not all. Duolingo has much bigger plans for its education and tutoring services, far beyond its current niche in teaching foreign languages. The company’s mission is to “develop the best education in the world and make it universally available.” You should expect the company to start making those moves soon.
“We made strong progress on our mission this past quarter, and we have exciting plans for the future,” said co-founder and CEO Luis von Ahn in the third-quarter earnings call. “I plan to devote my life to this mission.”
Furthermore, Duolingo now has an official head of animation and scripted content. Linda Simensky, former content development chief at PBS Kids, is already sketching out animated shows featuring Duolingo’s cast of characters. I expect a serious marketing push to go along with her content development efforts.
And you can buy into this ambitious plan of world domination at a…
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