Had Enough Of Stock Market Excitement?
We present Digital Ocean for your delectation.
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Digital Ocean DOCN 0.00%↑ is a company so boring that most folks haven’t heard of it, or, if they have, they instantly forgot about it. The company provides specialized forms of hosting used primarily by technical customers - developers mainly. Can you do all this at Google or Microsoft or Amazon or a hundred other vendors? Probably. Is there a reason why folks choose to use DOCN? Yup. Very boring reasons, and great customer service is uppermost amongst those reasons.
What’s unusual about the company is that they run a relatively capex-intensive business model - hosting will do that to you - that charges relatively low prices but manages to be cashflow positive. That’s impressive at this small scale (TTM revenue of less than $1bn). To our eyes this means we have a management team here that is focused, efficient, knows what they are doing. So we have high levels of customer service, solid growth, cashflow positive with UFCF margins improving every quarter … that’s a good recipe for future success.
Here's Digital Ocean's numbers including Q1 reported yesterday before the open. We then move on to our stock price outlook, rating and risk management ideas.