Twilio (TWLO): 2019 Top Picks' Mid-Year Update

07/23/2019 5:00 am EST

Focus: TECHNOLOGY

Michael Cintolo

Vice President of Investments and Chief Analyst, Cabot Heritage Corporation

Mike Cintolo chose Twilio (TWLO) as his favorite idea for 2019 for his growth oriented advisory service Cabot Growth Stock Investor. The stock has since risen 53%. Here's his latest update on the tech firm.

Twilio (TWLO) has been a great performer so far this year, and really, we think it’s one of the flag bearers of this bull phase for growth stocks.

The company’s communications platform is both pervasive, meaning every firm is a potential customer (even we use it!), and makes life easier for everyone. One of the most stunning statistics we’ve seen is the firm’s same-customer revenue growth—in Q1, it was up 46% from a year ago!

As for the stock, it hasn’t been the smoothest performer, with numerous pullbacks (including two poor post-earnings reactions), but it’s found support near its 50-day line on multiple occasions and nosed out to new highs after the market got going in early June, confirming that big investors are still picking up shares (even after a good-sized share offering in May).

Bigger picture, we think TWLO has farther to run. Given the unique fundamental story, it has the rapid and reliable growth that is catnip to institutional investors.

Near term, though, there’s a bit higher risk given that the stock hasn’t had a “real” correction all year while kiting higher by about 50 points.

We took partial profits (selling one-third of our position) a few weeks ago, but are aiming to give our remaining shares plenty of leeway to correct if need be so we can capture a potential larger, longer-term move.

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