Rather than taking a chance on cryptocurrencies like Bitcoin — which I think is in danger of plunging from where it is today – I’d rather invest in a fast-growing company new to the stock market such as Avast (LSE: AVST).
Although the cybersecurity provider only listed on the stock market in May 2018, it has a long history stretching back three decades. More recently, the outgoing chief executive, Vince Steckler, has presided over a 10-year period of growth, which saw the firm’s revenue soar from around $20m to $800m.
Change at the top
On the 30 June, new chief executive Ondrej Vlcek will get his legs under the desk after being promoted from president of the company’s consumer business. I like to see a periodic change at the top in companies because it can lead to new management drive and enthusiasm.
The firm claims to be “the global leader” in digital security products, which are sold under the Avast and AVG brands. With its more than 400m users online, the company is successful in its market niche, which involves countering threats from the internet and “evolving” threats from the Internet of Things (IOT). The company reckons its threat detection network is “among the most advanced in the world.”
Yesterday’s full-year results report revealed that adjusted revenue rose just over 8% during 2018 to produce a flat outcome for adjusted diluted earnings per share. The directors declared a maiden dividend that annualises out to produce a yield of just over 3% at the current share price near 298p. So far, so good.
Driving further growth
Steckler explained in the report that the company achieved the milestone of 12m paying customers for its PC products in November. He put that down to the success of the monetisation platform plus up-selling and cross-selling campaigns. The company is seeing growth in its established markets, as well as progress with breaking into new countries and geographies. And to keep the momentum going, it’s ploughing money into developing new products. There’s a “healthy” pipeline of product launches planned for 2019, which includes the firm’s new Smart Home security solution.
The outlook is positive and Steckler expects 2019 to be “another good year” with “high single-digit” growth in adjusted revenue. City analysts have pencilled in a decent single-digit percentage advance for earnings this year, which should feed into moving the dividend higher.
The forward-looking price-to-earnings ratio for 2019 is running just below 13, which could start looking cheap if growth picks up down the road on the back of all those anticipated new product launches. I think the stock looks attractive right now, and I’d much rather invest in Avast than punting on Bitcoin. Even if the share price remains sluggish and growth takes longer to ramp up than expected, I’d still have a return from the dividend, which is something you don’t get with cryptocurrencies.