Focusing on the stocks that are showing relative strength during periods of market uncertainty is a winning strategy more often than not. These are often the first names to bounce back when the market does turn around and can give investors valuable clues about which stocks are seeing the most demand. By seeking out the stocks that are outperforming the market as a whole or relative to a company’s individual sector, investors can narrow their focus to areas of the market that might continue to outperform.
Even though market breadth has been quite weak recently, there are a few stocks showing relative strength at the moment, which is why we’ve put together a brief overview of the standouts below. Each one of these companies has attractive long-term prospects and could be in for more upside ahead if the market can stabilize after the recent volatility. Let’s take a closer look below.
1. Matterport
If you’re a tech investor, you’ve probably heard the term metaverse recently thanks to Facebook’s big announcement that the company is changing its name to Meta Platforms. Many of the companies that are associated with this burgeoning trend in technology have been showing serious strength in recent weeks, and Matterport (NASDAQ:MTTR) is a good example.
The company has developed a 3D data platform that allows its customers to turn buildings and spaces into a digital world, which is exactly the type of technology that more businesses are going to be interested in given the rise of the metaverse.
Spaces like hotels, homes, offices, shops, and more can be digitalized using the company’s platform, and its application connects and controls any supported camera, including iOS devices. Considering all of the different industries that might be in need of Matterport’s platform, which includes real estate, 3D photography, retail, travel, insurance, and more, it’s easy to recognize why the stock has been catching a bid lately.
The company recently reported Q3 total revenue of $27.7 million, up 10% year-over-year, along with subscription revenue of $15.7 million, up 36% from Q3 2020. While this is a highly speculative investment, the stock’s recent relative strength and metaverse theme make it absolutely worth a look.
2. Qualcomm
Semiconductor stocks have been some of the strongest performers of 2021, and mobile chip leader Qualcomm (NASDAQ:QCOM) could be in for even more outperformance in the coming months. The stock is trading around all-time highs following a knockout investor day presentation and thanks to comments from CEO Cristiano Amon stating that the company is gearing up for plenty of growth outside of Apple (NASDAQ:AAPL).
Cristiano mentioned that “This company can no longer be defined by a single market and a single end-customer”, and investors are certainly buying into the vision that Qualcomm is diversifying into other high-growth areas like IoT chips and semiconductors that are used in the automotive industry.
Adding shares of Qualcomm makes even more sense when you consider how 5G networks will expand the company’s addressable market and the fact that Qualcomm’s forward guidance points towards less reliance on Apple going forward is certainly a huge positive.
The company was able to grow its revenue in fiscal 2021 by 43% to $33.5 billion, which is very impressive when you consider the supply chain constraints that Qualcomm and its customers have been dealing with. Adding shares of this relative strength semi stock could pay off in a big way, especially since it's one of the better values in the industry at a 16.39 forward P/E ratio.
3. The Trade Desk
Many of the high-flying growth stock winners of recent months have gotten slammed by sellers, which is why a name like Trade Desk Inc (NASDAQ:TTD) should be on your watch list. The stock has been consolidating its monster post-earnings rally nicely and showed significant strength during the recent market pullback, which means higher prices could be in store for shareholders.
The Trade Desk is a technology company that operates a self-service, cloud-based platform that helps advertising buyers create, manage, and optimize data-driven digital advertising campaigns.
Investors should love the long-term story here, as digital advertising is undoubtedly the future for most publishers. Advertisers need to make the most out of every dollar of ad spend, and this company’s third-party data is extremely valuable as it can optimize each ad campaign based on real-world insights.
The Trade Desk recently delivered strong Q3 results, including 39% revenue growth to $301 million, confirming that digital ad spending is bouncing back in 2021. Finally, the fact that the company just announced it will advance its partnership with NBCUniversal by adding the Peacock streaming video service to its connected TV platform is another sign that The Trade Desk is becoming a true digital advertising powerhouse.