Summary
Niche hosting business Digital Ocean had a solid quarter and its stock is trending sideways at the lows, indicating potential accumulation.
Growth is a little anemic, EBITDA and cashflow margins strong for this type of business.
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Another Stock That Isn't Nvidia
by Alex King.
At some point, Stocks That Aren't Nvidia will matter. Right now, not so much. Nonetheless, hosting business Digital Ocean (DOCN) put in a solid quarter and the stock continues to trend sideways at the lows, indicating potential accumulation.
Nobody, but nobody, cares about this kind of stock right now. It's not likely to double next week as a result. But can it move up slowly and then perhaps more quickly when someone notices? Sure.
Financial Fundamentals
6 Key points:
1.) DOCN is a small business with just under $700m of trailing twelve month / TTM revenue. Growth is OK on a TTM basis at +20% but is slowing each quarter - just +11% in the current quarter vs the same quarter a year ago.
2.) Gross margins are low at 59% reflecting the pay-away to third party datacenter companies.
3.) But ….
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