What Are VAPIN Stocks?

Anyone who has spent time in the world of finance is familiar with the acronym FAAMG. This refers to the five tech stocks that achieved massive growth, essentially carrying the S&P 500.

The tech companies in question include Facebook (FB), Apple (APPL), Amazon (AMZN), Microsoft (MSFT), and Alphabet (GOOGL). Combined, they have delivered 40 percent returns by the fourth quarter, versus the comparatively paltry 5 percent from the S&P 500 as a whole. 

While these stocks are expected to continue their rise, some investors – particularly those responsible for managing large funds – are looking for the next big winners. After all, diversification is, or should be, a priority in any portfolio, and in the case of mutual funds, it is a requirement. 

So, the question is, which stocks are poised for growth in the current market? Which have what it takes to meet consumer needs in the near term? Some analysts have a theory: the next big thing will be VAPIN stocks. 

What Are VAPIN Stocks?

VAPIN stocks are those expected to shine when it comes to offering the products and services consumers want given advances in technology. Specifically, they are solid companies with innovative solutions that will meet coming demand for the following: 

• Rise of E-Commerce
• Digital Payment Solutions
• Digitization of Healthcare
• Workflow Automation 
• Digital Transformation of Business 
• Breakthrough Therapies for Complex Medical Conditions 

While a wide variety of companies are working in these areas, there are five that stand out as most likely to succeed in generating growth and delivering shareholder value.

They are Vertex Pharmaceuticals (VRTX), Autodesk (ADSK), PayPal (PYPL), Intuitive Surgical (ISRG), and ServiceNOW (NOW) – VAPIN for short. 

Here’s what you need to know if you are considering a position in any or all of the VAPIN stocks: 

Vertex Pharma (VRTX) Revenue Growth Is Huge

Biotechs certainly come with their share of risk. After all, it’s fairly common for even the most promising drug candidates to underperform during clinical trials. When they fail to deliver the hoped-for results, stock prices can drop suddenly and sharply. Unfortunately for investors, there’s often no time to get out before sustaining major losses. 

With that said, investors with higher-than-average risk tolerance should consider biotechs that meet certain criteria. These companies are working on major breakthroughs in treating and curing disease. When they succeed, shareholders are rewarded handsomely. 

The primary factors to consider are the company’s drug candidate pipeline, it’s financial stability, and the partnerships it has formed with larger pharmaceutical companies. 

Vertex is widely considered a strong option among biotech industry experts for its work in cystic fibrosis-related therapies.

It produces several popular cystic fibrosis treatments, including the “miracle drug” Trikafta. So far, Trikafta is an appropriate option for roughly 90 percent of cystic fibrosis patients, and that addressable market may creep up with FDA approval of supplemental applications. 

Thanks to Trikafta – and to a lesser extent, several other cystic fibrosis drugs – Vertex achieved revenue growth of 77 year-over-year in the first quarter of 2020, and another 62 percent year-over-year for the second quarter of 2020.

Considering that growth is credited to drugs that have already survived clinical trials, there is every reason to believe that it will continue. That makes Vertex a smart buy. 

Autodesk (ADSK) Digital Sales Are Skyrocketing

Many computer hardware and software companies reported shocking increases in revenue and profit for the first half of 2020. They achieved the extraordinary results because of extraordinary external events – in particular, a swell in the work-from-home population due to the novel coronavirus.

Some were concerned about Autodesk, because its products aren’t quite in the same category. The company designs software and provides services for industries such as architecture, construction, education, engineering, entertainment, manufacturing, and media. Many of these were forced to scale down given pandemic-related uncertainty. 

As it turned out, those concerns were misplaced, and Autodesk delivered solid performance. When results were reported on August 25th, investors were pleasantly surprised. Revenue increased 15 percent year-over-year for a total of $913 million, and by early September stock prices were up by 33 percent year-to-date. 

Autodesk achieved these results, in part, by enhancing its digital sales channel. While this channel isn’t exactly new, the focus on making direct connections with consumers represents a change in strategy. Historically, more than 70 percent of Autodesk’s sales have been indirect.

That reliance on a third party to function as intermediary means lower profit. With the shift to direct sales, Autodesk is seeing promising movement in its operating margin. That takes pressure off of sales volume and contributes to greater profit. 

Autodesk leaders aren’t making big promises for the remainder of the year, but their cautious optimism has still piqued investor interest. If Autodesk can achieve the double-digit gains it expects, investors will benefit. That makes Autodesk a smart buy. 

PayPal (PYPL) Continues To Take Market Share

There are dozens of companies offering digital payment solutions today, but that wasn’t always the case. PayPal pioneered the industry when it launched its first electronic payment system in 1999.

In 2018, the company boasted approximately 286 million active user accounts, and it facilitated 9.9 billion payments in a single year. As of second quarter 2020, active user accounts increased to 346 million. 

The 2020 pandemic gave PayPal stock a substantial boost, as businesses and consumers shied away from cash. From mid-March to early September, share prices went up by 90 percent, leaving some investors concerned that a drop is inevitable. Are they right? 

PayPal’s users are loyal, which is important as the competition in this space heats up. Today, the company faces real challenges from providers like Square, Stripe, and Google Pay.

However, most analysts are still placing their bets on PayPal for the win. After all, the company was already on its way up long before COVID-19 was added to the mix. 

Since 2015, PayPal’s quarterly revenue increased by 221 percent. In the same five year period, net new active accounts rose by 522 percent.

That indicates PayPal is successfully growing its market share, despite the introduction of alternative digital payment providers. Overall, that makes PayPal a buy. 

Intuitive Surgical (ISRG) Da Vinci = Growth + Retention

While the healthcare industry as a whole tends to grow revenues year-over-year, many individual companies are struggling as the battle over excessive medical expenses continues to rage across the United States. 

The pandemic didn’t help most medical equipment companies, as a large percentage of consumers put off non-essential health-related purchases in 2020.

This phenomenon is attributed to widespread loss of health insurance, drops in household income, and a general fear that medical facilities and hospitals are unsafe. 

Intuitive Surgical is the exception, delivering a 9 percent increase in stock price year-to-date.

What sets Intuitive Surgical apart is its one-of-a-kind surgical robot, known as the da Vinci. This advanced machine is the only one approved for general surgery, and it is extremely popular among physicians and patients.

The da Vinci makes it possible for surgeons to perform sensitive procedures with much smaller incisions, which means greater precision, fewer side effects, and faster recovery. 

The demand for surgical robots is growing rapidly, and it is projected to reach $15 billion by 2027. Even if a competing device is eventually approved, Intuitive Surgical is already established as the industry leader. In short, Intuitive Surgical is a smart buy. 

ServiceNOW (NOW) Revenues Are Mushrooming

As more organizations move to the cloud, there is strong demand for the automation of IT Business Management. ServiceNOW fills that demand with its advanced IT solutions designed to streamline and automate workflow. 

While ServiceNOW was already growing before March of 2020, the pandemic delivered something of a windfall. Organizations that had never considered allowing remote work before were suddenly forced to close down offices and create virtual teams.

ServiceNOW helped to make the transition possible, and now that companies have established work-from-home procedures, many will leave them in place once the pandemic ends. 

That leaves ServiceNOW in an excellent position to grow its subscriber base. Since subscription fees make up 95 percent of ServiceNOW’s revenues, that growth is likely to generate strong returns for shareholders. In other words, ServiceNOw is a buy. 

VAPIN Stocks: The Bottom Line

Any investment carries risk, so the key is to find balance between level of risk and likelihood of reward.

VAPIN stocks appear to be just right for those who prefer to limit risk, but still want substantial upside potential.

These five are financially stable and pursuing forward-thinking strategies that are likely to put them in the right place at the right time to enjoy impressive growth. 

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.