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It’s always a smart idea to have a shopping list of shares at hand. This is what I had in April when the proverbial hit the fan, saving me valuable time deciding which stocks to buy when many suddenly went on sale.
Two on my list were Shopify and Nvidia, and I took my chance when things quickly went south. Those positions are currently up 40% and 51% respectively since early April.
Here are two shares that look overvalued, but which I think investors should consider putting on a shopping list for the next bear market or crash.
Untapped opportunities
The first is Axon Enterprise (NASDAQ: AXON). As well as owning the Taser brand, the company sells body-cams, dash-cams, and various software products to law enforcement customers. It’s also innovating in drones, VR training, and powerful artificial intelligence (AI)-powered tools.
Last year, revenue jumped 33% to $2.1bn, up from $681m in 2020. Over $1bn of that is now annual recurring revenue, while total future contracted bookings rose to $10.1bn.
The company continues to scale up very impressively. This rapid progress is reflected in the share price, which has vaulted 700% in three years.
The key risk now then is valuation, with the shares trading at 27 times sales. If Axon’s growth underwhelms, the stock could sell off heavily.
But I think this is definitely one to consider picking up during any such sell-off. The enterprise growth opportunity’s very large.
Take body-cams, for example. In an attempt to reduce attacks on staff, Walmart’s piloting black-and-yellow body-cams in some stores (Axon’s signature colours).
Management points out that Walmart has 2.1m retail workers, far in excess of the 900,000 cops in the US.
What about airlines? Cabin crew are no strangers to abusive behaviour. Cameras can provide evidence, reduce false claims, and deter aggression. They would integrate with Axon’s cloud-based evidence system, adding to the recurring revenue.
Meanwhile, the company’s sitting on a library of video data that’s roughly 40 times larger than that belonging to Netflix (NASDAQ: NFLX). Axon’s using this vast data trove to train AI models and power a growing suite of tools, embedding it ever deeper into customers’ daily workflows.
Looking ahead, the international opportunity in Europe, Latin America and Asia remains largely untapped.
Still leading, still growing
Returning to Netflix, I think the global streaming leader is worthy of consideration. But perhaps not right now around $1,220.
This price puts the stock at 13 times sales and 49 times forward earnings. Again, this stretched valuation leaves very little margin for error, particularly if subscriber growth unexpectantly slows.
Long term though, I’m bullish on Netflix. The firm possesses an incredible brand and streaming still has plenty of room to grow globally.
It also offers fantastic value for money. At £12.99, my Netflix subscription’s probably one of the last discretionary things I would cut.
The new ad-supported tier is just £5.99 a month — less than the price of a pint in London nowadays! I think Netflix can keep increasing prices for years without losing too many subscribers.
The firm has set a goal of reaching a $1trn market-cap by 2030, up from $520bn today. I think that’s achievable, especially if cutting-edge generative AI helps it make content for less money.
