3 Stocks That Have Doubled Since Trump’s Election Win: Can They Still Go Higher?
Since Donald Trump secured his presidential victory in November, a number of stocks have experienced significant rallies. Among those that have more than doubled are AppLovin (NASDAQ: APP), SoundHound AI (NASDAQ: SOUN), and Geo Group (NYSE: GEO). But what’s driving these impressive performances, and should investors consider these stocks a buy today?
AppLovin: A Leading Tech Stock
As of the most recent close, shares of AppLovin are up an astonishing 121% since Trump’s election win. This rally was kickstarted soon after the election when AppLovin released strong earnings reports on November 6, showcasing a 39% revenue growth for the third quarter, totaling $1.2 billion in sales.
Investors are particularly excited about AppLovin’s entry into e-commerce with a pilot project focusing on e-commerce ads, which could unlock tremendous revenue growth. However, it’s critical to note the stock currently trades at over 110 times its trailing earnings, indicating it may struggle to rise much higher without significant improvements in its bottom line. For current investors, now may be the time to consider cashing out, as AppLovin’s meteoric rise could be nearing its peak.
SoundHound AI: The Voice AI Revolution
Another tech stock that has witnessed a remarkable surge is SoundHound AI, with shares skyrocketing more than 165% since Trump’s victory. Its rise is not solely attributed to Trump’s policies but also to the company’s developments in the AI sector. The launch of its AI Smart Ordering product at Torchy’s Tacos has garnered attention, followed by a partnership with Church’s Texas Chicken.
Despite the rapid growth, SoundHound AI remains unprofitable, posting a net loss of $111 million over the last twelve months, overshadowing its revenue of $67 million. The company trades at a price-to-sales multiple of 65, which poses questions about its ability to sustain this upward trajectory without improved earnings. Investors may wish to take a cautious wait-and-see approach, carefully monitoring the company’s financial health moving forward.
Geo Group: Benefitting from Tough Policies
Geo Group is another stock that has capitalized on the post-election environment, with shares spiking by 105%. The company, involved in correctional and detention services, stands to benefit significantly from Trump’s stricter policies on crime and border control. Prior to the election, this stock lacked excitement, showing minimal revenue growth and earning just $36 million across its last four quarters on revenues of $2.4 billion.
While the stock’s current valuation at over 110 times its trailing earnings may raise red flags, the potential for new government deals could send Geo Group’s stock soaring further. Despite this potential upside, the high valuation could make this investment unsuitable for many traditional investors seeking stable, long-term growth.
Conclusion: Proceed with Caution
Although AppLovin, SoundHound AI, and Geo Group have all experienced impressive gains since Trump’s election, caution is warranted. The astonishing valuations paired with the potential of these companies’ earnings make them risky ventures. Market conditions can shift rapidly, and with the unpredictability of politics, invesors must be judicious in their strategic decision-making. It’s essential to stay informed and analyze future earnings closely for these companies before diving headfirst into investing.
As traditional conservative investors, we emphasize the importance of sound financial principles. Stocks may soar, but without the fundamental strength to back those valuations, they can plummet just as quickly.
