Alternative Data Ideas: Top Growth Stocks in August

August 16, 11:32 am

In today’s fast-paced financial markets, growth stocks remain a key focus for investors looking to capitalize on companies with the potential for significant earnings expansion. These stocks, typically characterized by higher-than-average revenue and earnings growth, can offer substantial returns. However, identifying the right opportunities requires more than just analyzing traditional financial statements. Increasingly, savvy investors are turning to alternative data—such as web traffic, app downloads, and social media engagement—to uncover insights that can indicate future performance before it’s fully reflected in stock prices.

In this article, we’ll highlight three stocks - Wingstop, Lemonade, and Roblox - that not only show strong earnings potential but are also exhibiting positive trends in alternative data. These indicators suggest that these companies are well-positioned for growth, making them worth a closer look this August.

Wingstop

Wingstop (WING), currently trading at $388 per share with a market cap of $11 billion, is a fast-casual chain specializing in chicken wings. The company is well-positioned to benefit from a broader consumer trend: more Americans are choosing chicken over beef. This shift is evident in the fast-food industry, with giants like McDonald’s reporting equal revenue contributions from chicken products and beef burgers.

Wingstop’s financial performance reflects this trend. The company reported $156 million in revenue for the last quarter, marking a nearly 50% year-over-year increase. But what makes Wingstop particularly interesting is the alternative data supporting its growth narrative. Web traffic to Wingstop’s website is on the rise, app downloads have surged, and the company’s social media audience is expanding. These indicators suggest that Wingstop is not only attracting more customers but also engaging them more effectively, signaling potential continued growth.

Lemonade

Lemonade (LMND) is a tech-driven insurance company that recently posted strong Q2 results, exceeding expectations on both revenue and earnings. However, despite this positive performance, the stock has seen a 25% drop, primarily due to a cautious revenue forecast for Q3. This decline may present a buying opportunity for investors who look beyond short-term forecasts to the company’s long-term potential.

Lemonade’s gross earned premium has seen substantial growth, reflecting an expanding customer base and deeper market penetration. The company’s innovative use of AI and machine learning to streamline the insurance process positions it for further growth in the industry. Additionally, alternative data points to a strengthening brand presence: Instagram followers have increased by 16% and Facebook followers by 11% over the past year. Furthermore, the number of open job positions has risen by 72% in the last three months, suggesting that Lemonade is gearing up for expansion. These factors, combined with insider buying by CFO Tim Bixby, underscore the company’s growth potential.

Roblox

Roblox (RBLX) is a leading platform for immersive, user-generated online experiences. While the stock has experienced volatility over the past year, it has recently stabilized around $40 per share. In its latest quarter, Roblox reported $938 million in revenue, up 12.6% from the previous quarter. The company also offered an optimistic outlook for Q3 and reaffirmed its goal of a 20% compound annual growth rate (CAGR) through 2026.

Roblox’s growth is driven by a robust increase in daily active users (DAUs) across all regions, particularly in the Asia-Pacific region. Notably, the over-13 age segment is now growing faster than the under-13 segment, with year-over-year growth rates of 26% and 21%, respectively. These trends are supported by alternative data: web traffic to Roblox’s site is trending upward, and app downloads have increased by 21% over the past three months. These indicators suggest that Roblox is not only maintaining its user base but expanding it, setting the stage for continued growth.

In conclusion, Wingstop, Lemonade, and Roblox each offer compelling growth stories supported by both strong earnings and positive alternative data trends. By integrating alternative data into their analysis, investors can gain a more nuanced understanding of these companies’ potential, making them well worth consideration this August.

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