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Motley Fool’s “FAZER” Stocks – Make 400% or More?

September 28, 2021 by Theodor

Dear fellow investor,

I’m going to be blunt…this is how our presentation starts, before stating that “If you want real, life-changing ground-floor returns, it’s time to forget about Facebook, Apple, Amazon, Netflix, and Google” (FAANG stocks).

They’re simply too big now to keep up at the same growth rate as before. So what do we do? This is where the “experts” from The Fool come in, as they think they have found the next big thing – they call them the “Next FAANG” or “FAZER stocks”

 

The Teaser

Some estimates suggest that there is about to be a new “Golden Age of IPO’s”, which could mint thousands of new millionaires. These ‘estimates’ come from none other than Motley Fool Co-founder and CEO Tom Gardner, who says that this is perhaps “the boldest bet of his 28 years as a professional investor”.

Tom Gardner co-founded The Motley Fool – the name taken from Shakespeare’s comedy As You Like It  in 1993 with a simple goal: “To help the world invest, better”. Since that time the investing advice company has grown to employ over 300 people worldwide, with several country specific websites covering their local respective markets. We have previously covered the IPO topic at length in the past, including with Jeff Brown’s SPAC “Pre-IPO Codes” and Paul Mampilly’s IPO Speculator.

The investor and author states that “if you’re expecting the traditional FAANG stocks to continue carrying your portfolio throughout the 2020s like they have for the past 10 odd years, you’re likely in for a rude awakening”. No disagreement from our part here.

The next part about five FAZER companies ultimately defining the next decade we’re not so certain about, but Tom thinks “it’s entirely possible that the next trillion-dollar-market-cap company could be among them!” A feat that just six companies and counting in stock market history have previously accomplished.

FAZER stands for:

F – the edge computing pioneer that enables internet data to travel between different countries – and even continents – at warp speed.

A – at only $7.5B in market cap, this revolutionary software platform is singlehandedly replacing the concept of the in-house “tech team.”

Z – A radical video technology company changing the way society will communicate in the future.

E – the “next Google” that’s redefining the concept of search functionality as we know it, but at 77 times smaller than the current size of Google.

R – the silent king of streaming media that has set itself up perfectly to dominate tomorrow’s entertainment industry.

Apparently, there’s one other thing these stocks all have in common, as all five FAZER stocks are recent IPOs.

 

The Pitch

Before we can find out the names and ticker symbols of these five companies, we are told to join the IPO Trailblazers – a Motley Fool Service, for ‘just’ $1,999. Which will reveal the names of Tom’s FAZER companies.

The subscription also comes with a 30-day satisfaction guarantee and a myriad of features, such as ongoing stock recommendations, coverage of upcoming IPOs, an IPO university with educational videos, articles, and more.

 

What in the World Are FAZER Stocks?

If you’ve been paying even a lick of attention, then you already know that FAZER is just a made-up acronym for the five recently-IPO’ed companies that Tom is teasing in his presentation, with each individual company’s name starting with a letter.

Tom tells us that the IPO market is on a historic tear right now. In fact, The Wall Street Journal has even stated that new IPOs raised a total of more than $62 billion in 2019 alone. The highest figure since the height of the dot-com boom.

If this brings back unpleasant memories of IPO horror stories like Pets.com and eToys.com back in the dot-com days, you’re not alone, but we are reassured that ‘this time really is different’ and long gone are the days when a company with “little more than a business plan and a ‘dot-com’ in their name” could make millions simply by going public.

Simply put, by almost any metric, the slew of companies filing for IPOs today are much safer, older, and much more established than their “get rich, then get out of dodge” brethren of the late ’90s. We are told that Tom himself plans to make a $1,000,000 bet on this “Golden Age of IPOs” that will represent perhaps “the most daring and outrageous single investment” in his more than a quarter century as a professional investor.

This is because the single biggest killer of wealth imaginable to him is saying “if only I had invested in X from the very beginning!”. Without a shadow of a doubt, this single phrase has cost those people hundreds of millions, if not literally billions of dollars in wealth over the years…until now that is.

As Tom has found a way to know whether or not to invest in each and every company preparing to IPO, which he is going to demonstrate to us here with his IPO investigation picks. Let’s see what they are.

 

Revealing The FAZER Stocks

Since there is quite a bit to go through, lets reveal each one in the same fashion as they were first teased to us earlier in abbreviated format:

F – the edge computing pioneer that enables internet data to travel between different countries – and even continents – at warp speed. This is almost certainly Fastly Inc. (NYSE: FSLY), which is an edge cloud platform for processing, serving, and securing its customer’s applications.

A – at only $7.5B in market cap, this revolutionary software platform is singlehandedly replacing the concept of the in-house “tech team”. This is very likely Appian Corp. (Nasdaq: APPN), whose platform automates the creation of forms, workflows, data structures, reports, and other software elements that are needed to be manually coded.

Z – A radical video technology company changing the way society will communicate in the future. This is none other than Zoom Video Communications Inc. (Nasdaq: ZM), which provides a widely popular videotelephone and online chat service through a cloud-based peer-to-peer software platform.

E – the “next Google” that’s redefining the concept of search functionality as we know it, but at 77 times smaller than the current size of Google. This one was decidedly more difficult to pinpoint, but we think it may be Elastic N.V. (NYSE: ESTC). Elastic has a market cap of ‘only’ $14 billion and is working on a technology that will enable enterprise users to search through structured and unstructured data for a range of applications.

R – the silent king of streaming media that has set itself up perfectly to dominate tomorrow’s entertainment industry. We’re positive this is Roku Inc. (Nasdaq: ROKU), as it makes digital media players for video streaming. Think of it like an aggregator of various streaming services, much like cable systems were for television channels.

Are any or all of these recent IPOs going to obliterate the S&P 500 or other stock indexes with their performance?

 

Real Opportunity to Make Life-Changing Returns?

Someone once published a study looking at IPOs and their long-term performance. It was written back in 2014, but it concluded based on empirical evidence that many of today’s IPOs suffer the same fate as the original IPO – United Dutch Chartered East India Company in 1602.  That is, they have an initial period of outperformance followed by a steady decline over the long term.

This is due to a multitude of factors, including IPOs having higher multiples than the market in general on their listing date as well other (simpler) strategies simply outperforming a broad basket of IPOs. We would venture to say that this time around likely won’t be any different and buying into businesses at their IPO price won’t yield outsized returns.

 

Quick Recap & Conclusion

  • Tom Gardner of The Motley Fool fame is here to tease five “FAZER” stocks, which he believes are the “Next FAANG” stocks, likening them to Facebook, Amazon, Apple, Netflix, and Google.
  • He suggests that there is about to be a new “Golden Age of IPO’s”, which could mint thousands of new millionaires, including five recent IPOs, which he has identified after more than a year of research.
  • In order to find out the names and ticker symbols of these heralded five, we must subscribe to the IPO Trailblazers – a Motley Fool Service, for ‘just’ $1,999. Included will be the names of Tom’s FAZER companies, ongoing stock recommendations, coverage of upcoming IPOs, and more.
  • Thankfully, we were able to reveal all five of the FAZER stocks right here for free as: F – Fastly Inc. (NYSE: FSLY), A – Appian Corp. (Nasdaq: APPN), Z – Zoom Video Communications Inc. (Nasdaq: ZM), E – Elastic N.V. (NYSE: ESTC), R – Roku Inc. (Nasdaq: ROKU).
  • Buying into newly-public companies at or close to their initial listing prices hasn’t been a winning strategy in the past, broadly speaking. This should continue, with only isolated examples being the exception(s).

Have you made it a practice to buy newly listed stocks? What has been your experience? Tell us in the comment section below.

 

Theodor


Theodor is an old school value guy, when he's not looking for great companies and great prices you can find him on the basketball court hooping.

  • At the prices of these stocks, these are 'buy-and-pray' stocks. I don't mind 'buy-and-pray' but, I would like them to be under $20.

  • Hello! Again another excellent article. #1 I have noticed all the ads lately for Motley Fool:
    makes me suspicious, are they "going under"? #2 IPO's are risky . Already there have been
    too many. Just kind of a sit back and wait and see mode for me. #3 Everyone wants to make millions! What a "come on"!
    Thank you and keep up the good work!
    Jill

  • I follow The Motley Fool’s newsletters daily and I could guess three of these at most. The names revealed do seem like many of the usual suspects and fit the descriptions. Great work! From this FAZER list, I bought four companies last year. They have all gone up, one as much as 3x. But I don’t know if I got them on the cheap cause of the pandemic. The tech-heavy focus makes it scary to look at their performance when the tech stocks in general fall.

    When the Fool recommended purchasing several recent IPOs back in late 2020, companies not on this list, I went in right away on two of them. That was a mistake. One of those new IPOs is still down 50% for me. The other is down 28%. In general, yes, it’s probably best to let the IPO hype fizzle out and wait to get a deal. A friend of mine who works in markets says the prices drop cause all the institutional investors and venture capitalists get out (i.e., sell) while the getting is good. Makes sense to me.

  • So, WOW.

    This morning–*this* morning, 9/29/2021, I got an email from The Motley Fool (I get their emails but don't subscribe/pay for their newsletter) telling me that they (the Brothers Fool) have just gone "All In" with $523,111 on "a small, California-based company that is pioneering a breakthrough technology that is enabling companies to move vast quantities of data over the Internet at lightning speeds."

    They further mention that they are so impressed by this company, which has worked up to 1 Bn in earnings in just eight years, that they invited its CEO to their offices to tell *her* how great they think the company is. And how, of course, if I pay the $50 to get their advisory service, then I too can find out the name of this "tiny, under-the-radar stock" that is going to go way way way up blah blah blah. Because "most investors have never even heard of this company's name."

    I've literally spent the last three hours or so trying to figure out what this company might be–looking at Motley Fool's 13Fs and holdings, searching for CA tech companies with female CEOs, etc. etc. Finally I decided to see if I could find something about the CEO visiting them, so I Googled that phrase…

    …and found an article from the SEPT. 5 2019 issue of USA Today, which is basically the EXACT SAME AD with the exact same wording (with one very important difference I'll get to in a second). It even mention that 2019 is the 25th anniversary of The Motley Fool (today's email mentions the 28-year-anniversary).

    First, I thought this stock might be Blackline (BL) but after realizing how old the tip was and doing some more sleuthing, it turns out it was Arista (ANET). Neither of which are anywhere near "under the radar" today (good buy or not, I don't know, but they're both waaaay over the $10/share implied in the email).

    Second, that part where I mentioned how he said they'd "worked up from zero to 1 Bn in revenue in just eight years?" Yeah. The original article from 2019 says they've "worked up from zero to $2.27 Bn in just eight years."

    So he's recommending a stock that's making $1.2bn *less* than it was making two years ago.

    Sheesh. I was actually considering paying for their newsletter, but no way am I doing it now.

    Thought you guys would be interested in this. Thanks.

  • I don't buy new listings, they are too volatile. There is plenty of opportunity afer they seatle down. Had a Motley subscription w/Tom. He's too expensive for what he provides.

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