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Saturday, March 11, 2017

Best Buys Now: Looking Ahead

See our best ideas for timely buys this month! And if you click the buttons below to follow your favorites, you'll learn more about them whenever we publish updates.

Alphabet

Trading at a lip-smacking valuation, Starter Stock Alphabet (NASDAQ: GOOG) is just too good to pass up. The most effective advertising platform in the world, it leverages its influence in our lives across seven platforms with at least 1 billion active monthly users: Search, YouTube, Chrome, Maps, Google Play, Gmail, and Android. Sales growth accelerated in 2016, and net income climbed at a level not seen since 2010. Strong growth is expected to continue, and the company is trading at only 20 times expected earnings for this year.

Proto Labs

How will the next great products be made? Maybe by additive manufacturing (e.g., 3-D printing), or perhaps by traditional injection modeling or computer numerical control (CNC) machining. However it happens, Proto Labs (NYSE: PRLB) can help, taking a client from design through iterative prototyping to on-demand manufacturing. Unlike the 3-D printing companies it's sometimes lumped in with, Proto Labs has continued to grow its revenue, year after year. Yet the stock isn't much higher now than it was four years ago. You can probably do the math: A company that once traded at a lofty premium is can now be had for a little over an average market multiple. As Proto Labs continues to grow, that won't last.

Seattle Genetics

Investors have grown increasingly enthusiastic about Seattle Genetics (NASDAQ: SGEN) over the past year. Sales continue to mount for Adcetris, the company's marketed antibody-drug conjugate for Hodgkin lymphoma and large-cell lymphoma. But more exciting is the pipeline. Results from the first ECHELON study, which could open up Adcetris for frontline sales, will come out this year. Around mid-year, the company will file for approval of Adcetris in cutaneous T-cell lymphoma. Beyond that single drug, FDA has just lifted a clinical hold on Vadastuximab talirine in acute myeloid leukemia, allowing a promising program to continue. And the company recently announced the licensing of a potential blockbuster drug from Immunomedics (NASDAQ: IMMU) that targets multiple cancers. This has looked so promising in early trials that the company may be able to gain approval based on the limited data that exists so far.

Twilio

Twilio (NYSE: TWLO) can boast some marquee customers for its cloud-based communication services. Companies like Uber, Netflix (NASDAQ: NFLX), Amazon.com (NASDAQ: AMZN), and Facebook (NASDAQ: FB) turn to Twilio for things like text and voice messaging, identity verification, and call-center integration. But what's just as important as all the customers Twilio is adding (over 2,000 in the fourth quarter alone) is the fact that existing clients tend to stick around and add more services. Dollar-based net expansion rate — the amount spent by existing customers in one period versus the same period a year earlier — was up 155% in the fourth quarter.

Ubiquiti Networks

We recommended Ubiquiti Networks (NASDAQ: UBNT) for a second time back in November, and since then the stock has lost ground and trailed the market. We think it's a short-term issue that you can take advantage of. Why? Despite posting better-than-expected revenue growth of 32% in its most recent quarter, earnings came in a little shy of guidance. The culprit was, frankly, classic Ubiquiti: It "misexecuted" the launch of its debut consumer product, did an 11th-hour redesign to make sure it was right, and paid expedited shipping to get it to market. It's the kind of misstep we've seen a few times before from Ubiquiti's bare-bones business model. But the bottom line is that the product was well received, net margins are still enviable, and other parts of the business — especially the enterprise business — are thriving.

Community Intelligence

We're surveying a select group of Rule Breakers members with a strong record of stock-picking on Motley Fool CAPS for their own top picks. We call this our Community Best Buys Now — these are not official picks from the RB team, but in the spirit of Foolish community, we wanted to pick the brains of these highly engaged RB members.
The winners in this month's community survey, listed alphabetically: Intuitive Surgical (NASDAQ: ISRG), Tesla (NASDAQ: TSLA), Twilio (NYSE: TWLO), Ubiquiti Networks, and Under Armour (NYSE: UA)Talk about them here!
Disclaimer: Community voters may have ownership interests in some of the companies picked as Community Best Buys Now. Please do your own research on these companies before investing.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Aaron Bush owns shares of Amazon, Facebook, MercadoLibre, Netflix, Proto Labs, Tesla, TripAdvisor, Under Armour (A Shares), and Under Armour (C Shares). David Gardner owns shares of Alphabet (A shares), Alphabet (C shares), Amazon, Facebook, Intuitive Surgical, MercadoLibre, Netflix, Proto Labs, Tesla, Under Armour (A Shares), and Under Armour (C Shares). David Kretzmann owns shares of Amazon, Facebook, MercadoLibre, Netflix, Proto Labs, Tesla, TripAdvisor, Ubiquiti Networks, Under Armour (A Shares), and Under Armour (C Shares). Karl Thiel owns shares of Alphabet (A shares), Alphabet (C shares), and Facebook. Rick Munarriz owns shares of Netflix. Tim Beyers owns shares of Alphabet (A shares), Alphabet (C shares), and Netflix. Tom Gardner owns shares of Alphabet (A shares), Alphabet (C shares), Facebook, Intuitive Surgical, Netflix, Proto Labs, Tesla, and Under Armour (C Shares). The Motley Fool owns shares of Alphabet (A shares), Alphabet (C shares), Amazon, Facebook, Intuitive Surgical, MercadoLibre, Netflix, Proto Labs, Tesla, TripAdvisor, Under Armour (A Shares), and Under Armour (C Shares).

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