This past week was pretty challenging for investors, but that didn’t stop me from putting money to work as the markets got wobbly. I bought back into AT&T (NYSE:T) on Monday, added to my Pinterest (NYSE:PINS) position on Tuesday, and finally become a Twilio (NYSE:TWLO) investor on Wednesday.
Step inside my shopping bag. I want to show you my haul. If you have the time, allow me to break down the reasons I was attracted to these three stocks during a week that probably scared off a lot of other investors.
It’s been eight months since I sold my stake in AT&T. I was’t a fan when it announced it was spinning off its WarnerMedia arm, combining it with another media mogul. When the stock moved higher on the news — even after the company announced it would lower its quarterly payouts — that was all I needed to get out.
Now I’m back. Ma Bell has sold off sharply since I bailed, and I was able to buy back in for 23% less than where it was when I sold — and that’s with the general market trading higher. I can appreciate AT&T’s core business. The stock’s current 8% yield will be closer to 5% later this year, when it completes the shift in assets, and its business won’t be as dynamic. However, with the stock now fetching just eight times forward earnings, it’s worth a shot.
With the market’s recent volatility, it’s also a good thing that telco has been marching to the beat of a different drummer. This week dented a lot of portfolios, but AT&T rose in four of the five trading days — up nearly 7% for the week. The bullish thesis for a pickup in AT&T’s wireless business once the 5G revolution starts to gain traction makes sense, and sentiment for telco stocks may finally be turning positive again.
The visual search engine has been hit hard in recent months. Pinterest stock is down 64% since peaking in February 2021. It suffered through the reopening of the economy last year, as folks were no longer as interested in finding new recipes to try in the kitchen or sharing home decor tips. We ventured out into the real world and spent less time on Pinterest.
Pinterest still reaches a massive audience, though. It had 444 million global monthly active users in its latest quarter, a big number but slightly less than its reach a year ago. The number of domestic users has declined sequentially in back-to-back quarters. One welcome byproduct of the reopening of the economy is that advertisers are willing to spend more to reach engaged Pinterest users. Revenue rose 43% in Pinterest’s latest quarter despite the 1% year-over-year decline in active users. Net income and adjusted earnings more than doubled.
Pinterest isn’t one of my highest-conviction stocks, but when it was one of my biggest losers on Tuesday, it felt right to double up on what was one of my smaller positions. The stock continued to drop as the week played out, so I’m off to a bad start with this portfolio move.
I’ve been a fan of Twilio for years, and I finally bought in when I saw it plummeting along with many falling tech darlings on Wednesday afternoon. Twilio’s the leader of in-app communication solutions. It’s working behind the scenes of some of your favorite apps to let you know that the driver’s at your door with your food order or that your desired vacation villa rental is available for booking. Other solutions include real-time password resets or marketplace authentication solutions.
The stock has never been cheap. Quality high-growth companies are rarely in the bargain bin. However, with Twilio shedding nearly half of its value since peaking 11 months ago, it’s a compelling time to kick the tires. Twilio’s still stepping on the gas. Revenue rose 65% in its latest quarter. Acquisitions padded top-line growth, but organic revenue still rose 38%. Developers swear by Twilio, and that explains why its dollar-based net expansion rate is a healthy 131%. Put another way, developers on the platform for more than a year are spending 31% more than they were a year earlier.
Twilio’s expected to turn profitable next year. Trading at an enterprise value of 15 trailing revenue is the lowest we’ve seen with Twilio. I missed the chance to buy Twilio early. Now let’s see if I didn’t get in too late.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.