One of the major deterrents that stop people from investing is the limiting belief that they need a lot of money in order to start investing.
This is wrong.
You don’t need a lot of capital to begin your investing journey, all you need is the right mindset. Amazon, Netflix, Microsoft, and many other Fortune 500 companies were all priced below $5 once upon a time.
Maybe you missed out on the early days of these tech giants, but don’t fret! I am here today to go over 5 stocks that I believe will be good investments over the next 5 years. The best part is that all of these stocks cost around $5 today!
******###### GLU MOBILE (GLUU) ######******
Thesis: Glu Mobile is a company that makes mobile games. Some of their well-known games are “Diner Dash”, “Kim Kardashian Games”, “Restaurant Dash w. Gordon Ramsay”, “Design Home”, “Deer Hunter”, and the “Tap Sports” series just to name a few. Mobile gaming is catching fire rapidly as smartphones are now becoming adopted en mass. Mobile devices are only going to improve in performance and become more widely adopted as they become more affordable for the rest of the world. These two factors will eventually contribute to mobile gaming becoming bigger than PC and Console gaming in the long term.
Current Price: $3.60
Trend: Mobile Trend; Gaming Trend; Millenials Growing Up Trend
Financials: Revenue up 58% YoY (year over year), in-app purchases up %106 YoY, net cash flow was (-)$10.5 million in 2016 reducing down to (-)$5.2 million in 2017.
Potential Risks: Poor execution, consecutive bad investments, competition from triple-A companies and indie game devs.
Conclusion: The current line up of celebrity endorsed games that are re-skinned versions of their classic “Diner Dash” game system like the Kim Kardashian Hair Salon or Gordan Ramsay game has proven to be an effective strategy. Glu Mobile is also focusing on games that are a little more outside the box, like Home Design – an interactive interior design game. Gluu has come down from recent highs of $6.90, in May 2015, but has had a huge run-up of %60.67 from $2.25 (Jan 30th, 2017) to $3.62 (Jan 30th, 2018) over the past year. I think Glu has much further to climb.
*****#######ZYNGA (ZNGA) #######*****
Thesis: Zynga is a video game company that focuses on mobile games. Zynga is the proud owner of games like “Farmville”, “Words With Friends”, “Zynga Poker”, and “Dawn of Titans” – just to name a few. Mobile gaming is catching fire rapidly as smartphones are now becoming adopted en mass. Mobile devices are only going to improve in performance and become more widely adopted as they become more affordable for the rest of the world. These two factors will eventually contribute to mobile gaming becoming bigger than PC and Console gaming in the long term.
Current Price: $3.61
Trend: Mobile Trend; Social Gaming; Casual Gaming Trend; Millenials Growing Up Trend
Financials: Revenue up 23% YoY (year over year), net income loss of (-)$41.7 million in 2016 & net income gain of (+)$18.1 million – becoming profitable mid-2017, and consistent Daily Active User in-app spending conversion rate.
Potential Risks: Management lack of risk-taking, reliance on old games being ‘sticky’ instead of innovating new games, consecutive bad investments, competition from triple-A companies and indie game devs.
Conclusion: Zynga’s line up of games are not as robust as Glu Mobiles. Zynga has been struggling when it comes to creating unique mobile games and has been relying on the strategy of remaking classic games with crisp execution. “Words With Friends” is an enhanced mobile version of the classic board game, Scrabble. Zynga Poker, which is 22% of their revenue, is literally an online version of classic poker games. The only Zynga game that can brag about an original IP is Farmville, which has been ripped off by many other game developers. I remain bullish on Zynga as long as management is willing to take risks on R&D and create a game that is more than just a reskin of previously made games.
*****########GOPRO INC (GPRO)#########***********
Thesis: Go Pro is the leading company when it comes to producing high-quality compact action cameras. Go Pro has had some ups and downs in the past, but now is a great time to buy and hold this unique company with few competitors.
Current Price: $5.55
Trend: Outdoors/Action Trend, Content Creation Trend, High-Quality Luxury Item Trend
Financials: Revenue increased %37 from $240 million in 2016 Q3 compared to $329 million in 2017 Q3. Over the same time, operating expenses dropped from (-)$182.9 million to (-)$108.2 million. Net Income increased from (-)$73 million in Q3 2016 to become profitable with income at (+)$21 million in Q3 2017.
Potential Risks: Larger Companies (Google, Apple, Amazon, etc..) decide to move into high-quality compact cameras – like Google Clips camera. Lack of innovation in the camera space & poor investment decisions (recent drone product being canceled). Also, mobile phone cameras becoming better (and durable) to a point where the average consumer does not need a specialized camera product.
Conclusion: Go Pro definitely has many issues as it comes to the company’s history. Go Pro recently announced they will be shutting down their drone division which can be seen as a good or bad thing. Good as they will be able to focus on their main product, but also bad as no investor looks fondly on poor decisions any company makes. Go Pro cameras are the go-to camera when it comes to the type of person who wants to have high-quality videos/photos of whatever outdoors adventure action they partake in. As long as they stay true to making the best high-quality compact action cameras, I remain confident in Go Pro’s future.
*****######GROUPON (GRPN)########******
Thesis: Groupon is a unique website that provides their customers with a plethora of coupon options for meals/events/shows/concerts.
Current Price: $5.31
Trend: Inequality Trend, Discount Prices Trend (Amazon owns this trend), E-commerce Trend, Customer First Trend
Financials: Revenue increased %6 YoY, Income changed from a loss of (-)$37,900,000 to a gain of $59,000.
Potential Risks: Poor partnerships, offers not compelling enough, competitors offering better deals, weak marketing campaign.
Conclusion: Investors fell out of love with Groupon after their IPO (Initial Public Offering) from an all-time high of $26.11 to a low of $2.45 in 2016. Over the past year, Groupon (GRPN) has increased from about $3 to just over $5 – over a %50 gain. Groupon does not have any major competitors besides Airbnb and a few smaller companies. As long as Groupon keeps offering exclusive deals that provide customers with unique offers, customers will keep coming back. After all, who doesn’t like a discount?
******########NOKIA (NOK)########********
Thesis: Besides having indestructible phones, Nokia has been focused on pivoting their business model towards 5G and network connectivity. Also, a 8.8% dividend yield does not hurt.
Current Price: $5.40
Trend: Mobile Trend, Faster Data Trend (5G)
Financials: Revenue down %4 YoY, Q3 2016 posted a loss of $119 million and a loss of $192 million in Q3 2017. Revenue increase of %73 in Nokia Technologies, revenue increase of %182 in Global Services. $5.3 billion in cash/assets to see them through the next couple years.
Potential Risks: Management inability to turn cash flow around, serious competition in the mobile phone space, 5G being far into the future.
Conclusion: Nokia still makes phones today, though these phones are not as indestructible as the phones Nokia has been known for. Nokia’s phones do not rate very well online, but the bright side of Nokia is the that it is a long-standing company that was founded in 1865! Nokia is looking to the future of connectivity using 5G and providing more B2B products through their service and network products. As long as Nokia does not go belly up with bad investment decisions, Nokia has huge potential to make a comeback through their networking and global service products.
Investing does not cost an arm and a leg to get started. All you need to do is think of trends, companies taking advantage of those trends, and a little bit of money.
A $5 investment in Amazon (AMZN) in 1997 at their IPO price would turn into $4,151 today!
Money is not the barrier to investing, the mindset is.
Thanks for reading.
-Jack
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P.S.S I may or may not have interest in the stocks mentioned above. I have solely expressed my opinions of the stocks about. Do not invest solely based on the information above as I am not aware of every individual’s situation and risk appetite.