| Hey there, savvy investors! This week, I'm bringing you two stocks that are showing serious momentum – one's a turnaround story that just exploded 25% post-earnings, and the other's a battle between two high-yielding MLPs where one clearly has the edge. Let's dive in. Fastly (FSLY): The Turnaround Nobody Saw ComingRemember when Fastly hit $100 during the pandemic? Well, it crashed all the way to $7, and everyone wrote it off as dead money. Then Q3 earnings dropped, and the stock exploded 25% in one day. Now trading just above $10, this turnaround is just getting started. Here's what changed everything: New CEO, new CFO, new President of Sales. Turns out, leadership actually matters. The results were immediate – accelerating revenue growth, rebounding net retention rates, and winning new business like crazy. The Q3 beat that shocked everyone: - Revenue growth accelerated to 15% (up from 12% in Q2)
- Security products grew 30% year-over-year to $34M (21% of revenue)
- Net revenue retention improved 2 points sequentially to 106%
- Adjusted EBITDA up 76% year-over-year to $25.7M (16.2% margin)
- Free cash flow swung from burning $37M last year to generating $37M this year
The guidance that sent it flying: Management boosted full-year revenue outlook to $610-614M (12% growth vs. previous 9-10% guidance) and flipped operating margin expectations from -1% to +2%. That's not a tweak – that's a complete reversal. What's driving the momentum: - Security products are crushing it – largest customers are gobbling up new API protection protocols
- International expansion is accelerating – new sales leadership targeting Asia Pacific and Japan
- Cross-sell is working – one top-10 customer just adopted products across all three product lines
The valuation that's still dirt cheap: Even after the 25% pop, FSLY trades at just 2.1x EV/FY26 revenue and 13.2x EV/FY26 adjusted EBITDA. For a company showing recovering sales momentum, expanding margins, and new leadership execution? That's a gift. Think about it: this stock hit $100 during the pandemic when the business was worse. Now it's at $10 with better fundamentals, actual profit growth, and accelerating revenue. The market is slowly waking up, but there's still massive upside as valuation normalizes. My take: This isn't a momentum chase – this is the early innings of a sustained turnaround. New products are working, customers are buying more, and profitability is inflecting. I'm staying long and riding this rally higher. Western Midstream (WES) vs. MPLX: The 9.7% Yield That WinsIf you're into high-yield investments, you've probably heard of both Western Midstream Partners and MPLX. Both are quality midstream MLPs with strong fundamentals. But here's the thing: right now, WES is the better buy, and it's not even close. Let me break down the comparison: What they have in common: - Both have rock-solid balance sheets (WES at 2.9x leverage, MPLX at 3.1x)
- Both generate industry-leading returns on capital
- Both have diversified asset bases with contracted cash flows
- Both are growing distributions while peers like Energy Transfer lag behind
But here's where WES pulls ahead: Yield advantage: WES yields 9.7% vs. MPLX's 8.5%. That's 120 basis points more income hitting your account every year. Over five years, WES's projected yield-on-cost reaches 10.7% compared to MPLX's 10.3%. Valuation edge: WES trades at 8.25x EV/EBITDA while MPLX trades at 9.98x. You're paying significantly less for similar cash flow growth profiles. Lower leverage: WES maintains a stricter 3.0x target leverage ratio (currently 2.9x) compared to MPLX's 4.0x upper limit. That's more conservative and creates a bigger safety cushion. The growth story for both: Analysts expect WES to grow distributable cash flow at 7.8% CAGR through the decade (with 3% distribution growth as they build coverage). MPLX will grow distributions faster but from a lower starting yield. When you do the math, WES edges out on total return potential. Both are leaning into natural gas: MPLX has 90%+ of growth capital allocated to natural gas/NGLs. WES is taking a more balanced approach but expects natural gas and water businesses to outgrow crude oil and NGLs. Either way, you're positioned for the LNG export boom. The risks you need to know: - WES counterparty risk: Heavy exposure to Occidental Petroleum (though OXY owns a big stake and is unlikely to leave given WES's strategic positioning)
- MPLX counterparty risk: Dominated by Marathon Petroleum with overlapping management (though alignment has been strong so far)
- Both face commodity price headwinds and project execution risks
Why WES gets my vote: At current valuations, you're getting a higher yield, lower valuation multiple, lower leverage, and comparable long-term growth. Plus, WES is cheap relative to its own recent history on both yield and EV/EBITDA metrics. The K-1 caveat: Both issue K-1 tax forms (they're MLPs), so if that's a dealbreaker, consider ETFs like AMLP or MLPA that hold MLPs but issue 1099s instead. The Week Ahead: What to WatchFor Fastly: Monitor any announcements about new customer wins, especially in the security product line. Any major enterprise deal would validate the cross-sell thesis and could push the stock higher. For WES: Watch for any updates on bolt-on acquisitions or organic growth projects. Also keep an eye on commodity prices and any news from Occidental that could impact WES's counterparty outlook. Growth and Income: The Perfect PairHere's what I love about this combination: Fastly gives you the turnaround growth story with massive upside potential, while WES/MPLX give you stable high-yield income with moderate growth. Fastly is your asymmetric bet. You're buying a $10 stock that hit $100 two years ago, now with better fundamentals, new leadership executing, and products that customers actually want. The valuation reset hasn't even started yet – you're getting in early on a multi-year re-rating. WES is your income anchor. That 9.7% yield is real, sustainable, and growing. With 2.9x leverage, investment-grade credit, and diversified contracted assets, you're getting paid nearly 10% to hold a business that's not going anywhere. My strategy: Use Fastly for growth exposure in your portfolio – it's the kind of unconventional smaller-cap play that can outperform the S&P 500 in 2026. Use WES (or MPLX if you prefer) for the income portion of your portfolio, collecting fat distributions while energy infrastructure continues benefiting from domestic production growth. The beauty? They're uncorrelated. Fastly's driven by cloud consumption and enterprise security spending. WES is driven by oil/gas production volumes and infrastructure demand. You're diversifying across sectors while capturing both growth and income. BLACK FRIDAY - $1K/WEEK INCOME SYSTEM Layered Options: The Thursday 3:15 PM Trade Stop buying options! Start STACKING the odds in your favor. BLACK FRIDAY PRICE: $97 (Regular $1,497) ✓ Trade emailed to you every Thursday at 3:15 PM ✓ Set it and forget it - auto-closes for profit ✓ 93.9% win rate in 2024 alone! ✓ Target $1,000 per trade with standard $4K stake ✓ Includes: Step-by-step guide, alerts & bootcamp LIFETIME ACCESS - SAVE OVER $1,400! 👉 [CLAIM YOUR $97 LIFETIME DEAL] Which play speaks to you? The tech turnaround or the high-yield energy infrastructure? Let me know! Stay sharp, Your Market Scout FindBetterTrades | 
Post a Comment
Post a Comment