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Redditors Send Corsair Higher, But Its Peripherals Industry Boasts Strong Revenue

Monday, June 14, 2021 | Kate Stalter

Revenue growth is the lifeblood behind earnings, and companies such as Corsair Gaming (NASDAQ: CRSR), Logitech (NASDAQ: LOGI) and Cricut (NASDAQ: CRCT) are seeing their prices rise along with sales. 

One of those, Corsair, became the target of Wall Street Bets Redditors, despite the good revenue growth. 

Generally speaking, the biggest growth stocks, particularly in their early years after going public, share certain characteristics. These companies have a new product or service that’s in demand from either consumers or businesses.

While chart analysis is perhaps the major factor in identifying stocks with good potential, fundamental metrics such as earnings growth and sales growth are behind major price advances.

Generally, you’ll find that winning stocks boast quarterly and yearly revenue growth in the double digits. That spurs increases in net income, which, in turn, push stock prices higher. 

Corsair Gaming went public in September, pricing its IPO at $17 per share, although the stock closed lower than $17 in its opening day.

Since then, shares more than doubled, closing Monday at $36, gaining 11% in the session, as the stock became the focus of the Wall Street Bets Reddit page.

As you might imagine, the stock was trading in monster volume after the meme stock crowd piled in.

Is this rally sustainable? Perhaps. But unlike other meme stocks such as Blackberry or AMC Entertainment,  Corsair has solid sales and earnings growth. Revenue grew at double-digit rates in each of the past eight quarters, accelerating in the past five quarters.

Could there be factors slowing Corsair’s growth? Sure, one being the global semiconductor shortage. However, Wall Street still expects double-digit earnings growth in the next two years, so they’re not giving up the ship.


Corsair, a maker of hardware and gear for gamers and content creators is part of a red-hot industry. 

Even the WSB Redditors noted the increases in revenue, with one thread characterizing the stock as “undervalued” and touting its long-term potential with a strong brand presence.

That makes it unclear how long Corsair’s tenure as a meme stock will last. On the one hand, the fundamentals mean the stock has a solid business case. However, the total short interest is slightly above 20%, which could be slightly risky. 

Other computer peripheral makers are also rising in price. 

For example, Logitech, maker of headsets and microphones for the same customer base as Corsair, is up 32.72% year-to-date and 124.02% in the past year. 

Revenue grew from $902.7 million in the quarter ended in December 2019 to $1.535 billion in the most recent quarter. Sales grew at double-digit rates in the past four quarters, and accelerated for the past five.

Both these companies enjoyed tremendous success during the pandemic, as workers outfitted their computers to work from home, while gamers made purchases to keep themselves entertained during the lockdowns.

Logitech broke out of a double-bottom base on May 26, clearing a buy point above $117.14 in above-average volume. 

It pulled back from its June 9 high of $140.17, and may be in a buy range soon if it continues to find support above its 50-day moving average. 

Meanwhile, Cricut, a completely different kind of computer peripheral maker. The company, which went public in March, is consolidating below its June 4 high of $34.89. The stock, along with Logitech, retreated after Morgan Stanley issued negative comments about computer peripherals based on valuations. 

Cricut makes gear used by home crafters to cut fabrics, paper leather and other materials. Revenue has been strong for the past two years, growing at rates between 11% and 149%. 

Growth accelerated in the past two quarters. 

On the earnings side, the company saw triple-digit growth in the past four quarters. 

Because the stock is so new, Cricut needs time to establish its trading history and build some more bases. That could happen soon, if the current consolidation remains constructive and remains above key moving averages.

Like Corsair Gaming, Cricut finished its first day of trading below its IPO price. However, the stock is up 91% since its public debut. The stock is not currently in a buy range but is another one that investors may want to keep an eye on, due to the strong fundamentals. 

Should you invest $1,000 in Corsair Gaming right now?

Before you consider Corsair Gaming, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Corsair Gaming wasn't on the list.

While Corsair Gaming currently has a "Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The 5 Stocks Here

 


Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Logitech International (LOGI)
2.3481 of 5 stars
$58.34-1.5%N/A15.43Buy$100.38
Cricut (CRCT)
1.9348 of 5 stars
$8.83-9.9%N/A17.31Hold$14.00
Corsair Gaming (CRSR)
2.6052 of 5 stars
$15.80+3.3%N/A31.60Buy$27.50
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