This year was certainly one like no other. The fear induced by the pandemic resulted in one of the fastest declines in the history of the stock market, followed by one of the fastest recoveries ever recorded. The recent introduction of at least two coronavirus vaccines has given people hope and pushed major stock market indices to new highs.
It is not yet clear when this pandemic-influenced economy will really return to normal and uncertainty still reigns. Still two things it is Right: investing in quality stocks over the years or perhaps decades remains the clearest way to generate wealth in the long run, and there are still stocks that are worth buying, even when the market is setting new benchmarks.
Assuming you have a sufficient emergency fund formed and $ 10,000 (or less) that you don’t expect to need in the next five to ten years, here are three companies that were created to flourish in the years and decades to come.
Image source: Getty Images.
1. CrowdStrike: Providing digital security in an uncertain world
There is no denying the massive shift to remote work that occurred as a result of the pandemic. The dispersion of the workforce presented unprecedented challenges for IT departments that were trying to protect companies and employees from the growing threat of cyber intrusion. CrowdStrike Holdings (NASDAQ: CRWD) was there to answer the call.
Stopping cyber security threats before they occur is the key to the company’s native cloud offering. This is courtesy of its Falcon platform, which focuses on protecting endpoints – servers, desktops, laptops and mobile devices – from recognized threats.
But his work does not stop there. CrowdStrike’s cutting-edge protection uses cloud analytics, artificial intelligence (AI) and real-time visibility to power its threat graph breach prevention mechanism. These sophisticated algorithms not only detect breaches and prevent them, they also learn and improve over time, harnessing the power of AI to stop the next generation of threats. As new customers join the group, their network becomes stronger.
The business is growing. In the first nine months of 2020, CrowdStrike’s revenue increased 85% year on year. This was driven by annual recurring revenue which increased by 81% and the addition of new net subscription customers which increased by 88%. The company has yet to make a profit, but the results are going in the right direction, as CrowdStrike has reduced its losses by almost 62% this year.
CrowdStrike is well positioned not only to benefit from the continuing need for remote work, but to continue to provide cybersecurity in an increasingly dangerous digital world.
Image source: Getty Images.
2. Twilio: Making communications in the app a snap
One thing that became quite clear this year was the need to keep the lines of communication open between companies and their customers. Instead of reinventing the wheel, many companies with consumer-oriented applications have turned to Twilio (NYSE: TWLO) Fill the gap. An increasing number of developers incorporate the company’s communication technology into their applications, which works behind the scenes to process calls, videos and text messages without ever leaving the application.
Sound familiar? Those real-time messages you receive from your food delivery service or shared transport provider? The ability to reset a password without leaving an application? These in-app chats with customer service? There is a good chance that many of these experiences were driven by Twilio’s technology.
The importance of reaching customers where they live took on even greater significance during the pandemic, helping to boost Twilio’s fortunes. During the first nine months of 2020, revenue grew 51% year on year. In a surprising development, Twilio delivered an adjusted profit (non-GAAP) in the third quarter, when investors were expecting a loss.
Twilio’s active customer base continues to grow, with a 21% increase year over year. Not only is the company adding new customers at a rapid pace, but existing customers are expanding their relationship with Twilio, spending 37% more, on average, than last year.
Even more important for investors was the recent acquisition of the customer data platform Segment, which pushes Twilio even further in the field of customer engagement services. This will provide companies with a unique view of customer information from a variety of channels, providing more integrated and effective customer engagements. The move also significantly increases Twilio’s total addressable market.
The importance of customer communications has never been more important and Twilio provides the tools to help fill that gap.
Image source: Getty Images.
3. Datadog: Giving the cloud a silver lining
The move to cloud computing was already in full swing, but it was unceremoniously driven by the pandemic. The strategic importance of monitoring and maintaining these cloud-based systems cannot be overstated and it is more important than ever to keep these systems focused on employees and customers up and running, as any downtime can become critical and expensive. This and where DataDog (NASDAQ: DDOG) goes into.
The cloud’s native platform as a service (PaaS) provider offers a wide variety of monitoring services that gather vital information from a company’s cloud operations, pulling data into a single dashboard and notifying developers when there is a problem that could result at a crucial downtime. The DataDog’s ability to break down silos and gather otherwise fragmented data in one place makes it the primary choice among developers.
That’s why the platform was selected as the best choice for monitoring application performance by research company Gartner, who named him one of the 2020 “Visionaries” in his famous Magic Quadrant. The company has also been identified as an industry leader in smart applications and service monitoring by Forrester Research. Customers agree, with an impressive 98% giving the DataDog a four or five star rating.
Business is dynamic. In the first nine months of 2020, DataDog reported revenue that grew 71% year over year. The company is also on the verge of consistent profitability, cutting losses by 85% so far this year. What is even more impressive is that DataDog achieved these achievements just a year after the company went public.
The need to keep critical systems up and running has never been more important, so investors should take the DataDog for a ride.
Data by YCharts
A word about evaluation
Each of these companies offers the opportunity for mind-boggling growth in the next decade, but like many high-growth stocks, they fall into the high-risk, high-reward category. As such, they are not cheap. CrowdStrike, DataDog and Twilio are selling 53, 51 and 34 times future sales, respectively – when a good price / sales ratio is generally considered to be between 1 and 2. This high tag price is partially explained by each stock’s performance so far this year, as noted in the chart above.
Each of these companies came to understand a fundamental but critical fact for software companies as a service: the value of new customers’ lives is much greater than what is being spent now to acquire them, so profits can remain elusive for those tall -flyers.
So far, however, investors are more than willing to pay for the impressive revenue growth and the explosive profit potential that remains.