EarningsBeats Digest

Published: Fri, 10/23/20

EarningsBeats.com Digest for October 23, 2020

Software Remains Strong And Here's A Leader

I would definitely remain bullish the software space ($DJUSSW). Yes, the group needs a break from time to time, especially after the stellar returns the past few years, but I don't believe the run has ended. In a historically-low interest rate environment, it makes sense to me that the fast growers can command much higher PE multiples. I believe they'll run higher later in Q4 and into 2021. One leader that I'd pay close attention to is Twilio, Inc. (TWLO). TWLO cleared its August high earlier in October and its relative strength has been soaring:

I'll be shocked if TWLO falls short of earnings expectations. To the contrary, I'm expecting a much-better-than-expected revenue and EPS number delivered when TWLO reports on Monday, October 26th after the closing bell. Volume trends remain strong and TWLO recently broke out relative to the software group. I wouldn't say that TWLO is the best software stock in the space, but it's far from the worst. I believe we're going to see a very strong earnings report on Monday.

Happy trading!

Tom Bowley

Chief Market Strategist

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