Stocks to watch in October: 40 Finance YouTube Channel

Geoff Beers, the creator of the 40 Finance YouTube Channel joins Yahoo Finance to discuss which stocks he has on his radar as October begins.

Video transcript

SEANA SMITH: Let's talk about this and what we could expect going forward, some investment ideas for that. We want to bring in Geoff Beers. He's the founder and creator of the YouTube channel, 40 Finance. Geoff, it's great to have you. You have thousands and thousands of followers who closely track what you're seeing in the market, where you're seeing investment opportunities. So here we stand at the beginning of October. We're seeing another day of selling, coming off what was a pretty weak September. So where do we go from here? Where are you seeing opportunity?

GEOFF BEERS: Well, I think-- and it's an interesting question because, in my opinion, we're sort of stuck in a middle ground right now. While the tech stocks have come down and personally, on my list, I've got a handful, such as Crowdstrike, Nvidia, and some others that I'd be interested to buy, they haven't quite fallen enough for my tastes anyway. And then on the flip side, you see people rolling into cyclicals, such as travel stocks and hotels. And in my opinion, even those are starting to reach a point where folks are saying, you know, best case scenario is already priced in.

ADAM SHAPIRO: What mistakes do the old-timers make when they dismiss retail investors? And what motivates retail investors, whether they're going to buy on a dip or dive in?

GEOFF BEERS: Yeah, I think, like, you know, the biggest thing that gets overlooked is just the long-term, right, and just understanding, even as we're talking here today about stocks that are up and down, it's just-- it should be really, really hard for investors to form a long-term thesis, in my opinion. I think the first two or three years out of investment is pretty easy because you have projections, and you have so many analysts working on stocks.

But looking at the headlines, if you will, can be very confusing if you think that you're a long-term investor, because it doesn't take a whole lot. We saw Facebook down today, like physically down, as well as the stock. And it's easy to get nervous. And I think like the more chatter you listen to, the more skittish you'll be. So what-- you know, what I sort of preach to myself, anyway, is just looking at a stock and really, like, committing to, like, a five-year thesis on it. Like, how far can this go in five years? And what is a fair price to target it in the short-term. And then buy, add some position, and hold from there.

SEANA SMITH: Well, speaking of that strategy, Geoff, you mentioned Crowdstrike just a minute ago. And that stock is off almost 15% in the past month. But you were saying that there still might be some room for some declines before you buy in. I guess, when you're taking a look at these names, how big of a drop are you typically waiting to see before you identify an entry point?

GEOFF BEERS: Yeah, you know, I've spent a lot of time on Crowdstrike here recently. I do not own this one yet, but it's been on my watchlist for quite some time. They work in what's called endpoint security, which is a rapidly growing segment of cybersecurity. And when you think of endpoints, it can be anything from a person's phone to a login on a computer, anywhere that interfaces with a website or a community. So, obviously, that world is growing.

But the problem for me with Crowdstrike isn't necessarily their business proposition. It's just been, like, the sky high expectations that folks are having. And this is what we're seeing a lot of right now across big tech names. This year was a huge boon year for revenue for almost all of them, right? A lot of plus 50%'s, a lot of plus 60%'s. But if you look ahead to next year, at least from an analyst standpoint, you start to drop to plus 20%, plus 30%.

And that's great, right, in a normal year. But what you're going to see on a lot of these reports next year is, hey, we grew 50% in 2020. And now, you know, heading into-- or excuse me-- in 2021. But in 2022, our same year over year growth is going to shrink to plus 25%. Again, plus 25%, awesome. But when you start looking back at it on some of these prices, folks feel like-- have priced in plus 50% for infinity. I don't necessarily see it that way. And to answer your question specifically on Crowdstrike, I'd be looking for a price a lot closer to 200, I think was a little bit more of a reasonable value.

ADAM SHAPIRO: You know, when you say that you have stocks on your radar, it's important to remember that the radar can tell you about incoming, and you may want to duck. And I use that as the setup to ask you about Snap. A lot of people have written Snap off, and yet, it's, you know, trading above $70 right now a share. I can remember when people were saying, should have sold Facebook back in the day. Why is it on your radar screen?

GEOFF BEERS: So, to be fair, I got some of my intelligence from my teenage son who's on there all the time. And really, there's this world that they have envisioned with sort of a combination of virtual reality and reality, right? So, for us old-timers, you know, if we're at a baseball game and we take a snap of ourselves there, but we blend it a little bit with, like, a virtual reality, whether we're adding stickers or we're overlaying video clips, just really, really creative things.

And I think my passion for it right now, which I have not bought in yet, my passion for it right now is I think, you know, they're really focused on the camera angle being like a digital camera amplifier and allowing people to sort of hold this creative social media in their pocket. And the numbers are showing explosive growth, right? And I'll tell you what's surprising, is the revenue this company makes. If I remember off the top of my head, it's got to be close to $5 billion that's either projected for this year or next year.

And this is a company that does not have a self-service ad platform like Facebook, Pinterest, Google, et cetera. It's nearly all brand contracts and large contracts. And I have been slow to this one. So I certainly-- I don't own it yet. I didn't buy it at $5 or anything like that. But keep your eye on it because I think we're seeing a maturation in social media. And some of that is going to be people getting tired of the same old thing.

SEANA SMITH: And Geoff, real quick, before we let you go, we have to ask you about Lyft because I know that's also one of the stocks that's on your radar right now. Uber isn't, so it's interesting that you're seeing some value in one of those names and not the other. What makes Lyft more attractive to you, in this case?

GEOFF BEERS: Yeah, and to be fair, it's a hunch on my part. Some of it is just they're a little bit closer to the Google side of the coin with the Waymo partnerships and stuff like that. I also think Google owns a chunk of both Uber and Lyft. But I do believe they own more Lyft. So when I think ahead to this autonomous vehicle world that we keep talking about and is probably likely 5 to 10 years away, at the heart of it all, in my opinion, sits Google Maps, OK? And it sits Google, Waymo. I think that they're ahead of the game. And I think Lyft's closer to that world.

The other thing that I see with Lyft right now as a benefit over, like, Uber stock is Lyft, at least from an analyst standpoint, could be profitable next year, could produce profitable EPS. So it'll probably be on a non-GAAP basis, just to be fair. But we've been waiting for this time to get off of these other metrics, such as EV, EBITDA, all this stuff. You might see at least a non-gaap EPS out of Lyft next year. And at $55, there's more expensive bets you could place for the future.