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Best Stocks for 2016: Understated Globant SA (GLOB) Stock Continues Innovating

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Editor's Note: This article is part of our Best Stocks for 2016 contest. Jon Markman's pick for the contest is Globant SA (NYSE: GLOB )

The world of technology is changing dramatically before our eyes, and yet most brands have virtually no clue how to leverage their customers and shareholders.

Whether you're talking about driverless vehicles, brain-signal control of the physical world, virtual reality or a dozen other digital accomplishments, most large consumer staples and services companies are watching from the sidelines, worried that they will jump on the wrong development too early or the right development too late.

Globant SA (NYSE: GLOB ) is one of the few companies in the world that is dedicated to helping large companies bridge that gap between watching and analyzing, and taking action. And is being very well rewarded for its efforts.

Why I Still Like GLOB Stock

The Buenos Aires-based software development and consulting firm has grown from a $60 million market cap a couple of years ago to a $1.4 billion market cap today, an astonishing journey that I have advised investors to take advantage of.

Shares are up about 5% since I recommended GLOB as one of my best picks for 2016, but they have been on a tear as of late. The company experienced a sensational second quarter, climbing 27% since the end of March, hitting new all-time highs.

Looking at its journey a different way, the difficult start for techs and small companies overall at the beginning of the year weighed on GLOB shares early on, but since hitting a low on Feb. 12, shares are up a whopping 68%.

Fueling the quick turnaround has been investors' discovery that Globant fundamentally posted excellent back-to-back quarters. As I summed up in my last update in March, Globant reported an outstanding fourth quarter to end 2015, growing both revenues and profits well ahead of expectations. The company was able to follow that up with even better results in the first quarter of this year.

Revenues for the first quarter of 2016 were $73.3 million , a jump of 34.5% from this time a year ago. Additionally, gross profit climbed to $33 million, up 57% from 2015. What's impressive about the sales growth is that it was broad-based, with both top-10 and non top-10 client revenue growing at a rate north of 33%.

Looking forward, the firm now expects full year revenues of $312 million, representing a jump of 23% from the $253.8 million it posted last year. That's probably a low estimate.

The geographic breakdown for Globant revenues remains favorable, with over 80% of sales generated in North America and only about 7% from Europe. That means that the effects of the Brexit vote will have very little impact on the company.

As Globant chief executive and co-founder Martin Migoya noted in the earnings release, "Companies are embarking on company-wide digital transformations and we are being selected as a strategic partner to help them walk this important path."

Another significant notch in the belt for GLOB during the quarter was the recent acquisition of WAE - We Are London Limited and We Are Experience - a digital services design company. Founded in 2003, the 40-person team already works with several Fortune 500 companies, and will allow Globant to expand not only its geographic footprint, but its product breadth as well.

Despite the recent success, the company isn't resting on its laurels and is continuing to innovate, announcing last month the addition of two new platforms to its proprietary software delivery model, "Services over Platforms."

The new offerings allow Globant to compete with traditional software-as-a-service companies, but on a completely customizable platform.

One of the key benefits to customers is the pricing model, which allows Globant to charge clients on a per user, per month or per transaction basis. The company is one of the few digital consultants in the industry to find a happy medium between one size fits all and completely customized offerings.

A typical new program is I Am At, a digital journey platform that combines social media, gaming strategies, mobile technologies and Big Data to analyze and maximize the user mobile experience with a company's brand. It is constantly learning from user behaviors and, in milliseconds, can trigger personalized experiences based on their social profile and actions.

A great example of real world application for the new platform is broadcasters and production companies with live events, TV series and cooking shows. Users can download apps that allow them to comment, vote and make interactive choices during the show. Among programs that offer interactive features, Globant estimates that 60% of consumers utilize their smartphone while watching TV, further strengthening the emotional link between end users and brands.

GLOB remains at the center of the Internet of Things revolution, and every new platform solution the company provides is another branch on the ever growing tree. For a full profile of Globant SA and why I chose it as my Best Stock for 2016 , click here .

And besides, how can you resist a company with the self-confidence to make its trading symbol GLOB?

Jon Markman operates the investment firm Markman Capital Insights. He also offers a daily trading advisory service, Trader's Advantage, andCounterPoint Options, a service that helps individual traders make steady, consistent profits with volatility-related instruments. Follow him on Twitter for his latest take on markets and innovation.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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