This year was definitely one like no other. The anxiety caused by pandemic has led to one of the fastest declines in the history of the stock market, followed by one of the fastest recovery programs recorded. The recent launch of at least two coronavirus vaccines has given people hope and pushed the major stock market indices to new everyday highs.
It is still unclear when this economy affected by the pandemic will return to normal and uncertainty still prevails. Yet two things is sure: investing in quality stocks over years or maybe decades remains the clearest way to generate long-term wealth, and there are still stocks worth buying, even if the market sets new benchmarks.
Assuming you have built up an adequate emergency fund and $ 10,000 (or less) that you would not expect in the next five to ten years, here are three companies that will thrive in the years and decades to come.
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1. CrowdStrike: Providing digital security in an uncertain world
The massive shift to remote work that took place as a result of the pandemic cannot be denied. The proliferation of the workforce posed unprecedented challenges for IT departments trying to protect businesses 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 take office is the key to presenting the cloud industry. This is thanks to its Falcon platform, which focuses on protecting the endpoints – servers, desktops, laptops and mobile devices – from recognized threats.
But the work does not stop there. CrowdStrike’s latest protection uses cloud analysis, artificial intelligence (AI) and real-time visibility to power its threat graph breakage prevention engine. These sophisticated algorithms not only detect violations and stop them in their tracks, but 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, its network becomes stronger.
Business is thriving. During the first nine months of 2020, CrowdStrike’s revenue increased by 85%. This was driven by annual recurring revenue which increased by 81% and the addition of net new subscriber customers which increased by 88%. The company has not made a profit yet, but the results are moving in the right direction as CrowdStrike has reduced its losses by almost 62% so far this year.
CrowdStrike is well positioned not only to take advantage of the ongoing need for remote work, but to provide cyber security in an increasingly dangerous digital world.
Image Source: Getty Images.
2. Twilio: take a turn in-app communication
One thing that became very clear this year was the need to keep the communication between businesses and their customers open. Instead of rediscovering the wheel, many companies have turned to consumer-focused apps Twilio (NYSE: TWLO) to bridge the gap. A growing number of developers are incorporating the company’s communications technology into their applications, working behind the scenes to process calls, videos and text messages without leaving the app.
Does that sound familiar? Those real-time messages you get from your food delivery service or service provider? The ability to reset a password without leaving an app? Those in-app chats with customer service? There is a good chance that many of these experiences are powered by Twilio’s technology.
The importance of reaching customers where they live gained even greater importance during the pandemic, which promoted the prosperity of Twilio. During the first nine months of 2020, turnover increased by 51% year on year. In a surprising development, Twilio made an adjusted (non-GAAP) profit in the third quarter when investors expected a loss.
Twilio’s active customer base continues to grow, up 21% year-on-year. Not only is the company adding new customers quickly, but existing customers are expanding their relationship with Twilio, spending an average of 37% more than last year.
Even more important for investors was the recent acquisition of the customer data platform Segment, which pushes Twilio further in the field of customer engagement services. It provides businesses with a single view of customer information from different channels, ensuring seamless and effective customer engagement. The move also significantly increases the total liable market of Twilio.
The importance of customer communication has never been so important and Twilio provides the tools that help bridge the gap.
Image Source: Getty Images.
Datadog: Give the cloud a silver lining
The shift to cloud computing was already in full swing, but was driven incessantly 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 employee- and customer-focused systems running, as downtime can become critical and costly. It is true DataDog (NASDAQ: DDOG) income.
The cloud-native platform-as-a-service (PaaS) provider offers a wide range of monitoring services that gather important information from the cloud operations of an enterprise, pull the data into one dashboard and notify developers when a problem arises is leading to essential downtime. DataDog’s ability to break down silos and gather otherwise fragmented data in one place makes it a top choice among developers.
Therefore, the platform was chosen by research firm as the best choice for monitoring application performance Gartner, calling it one of the “Visionaries” for 2020 in its acclaimed Magic Quadrant. The company has also been identified as a leading leader in intelligent application and service monitoring by Forrester research. Customers agree, with a whopping 98% giving DataDog a four- or five-star rating.
Business is fast. During the first nine months of 2020, DataDog reported revenue that grew by 71% year-on-year. The company is also on the verge of steady profitability and has reduced its losses by 85% so far this year. What is even more impressive is that DataDog achieved these achievements only one year after the company became known.
The need to keep critical systems running has never been so important, which is why investors should consider stepping up DataDog.
Data by YCharts
A word about valuation
Each of these companies offers the opportunity for amazing growth in the coming decade, but like many high-growth stocks, they end up in the high-risk category with a high reward. As such, it is by no means cheap. CrowdStrike, DataDog and Twilio sell at 53, 51 and 34 times pre-sales respectively – when a good price-to-sales ratio is usually considered between 1 and 2.. shares’ performance so far this year, as shown in the chart above.
Each of these businesses has understood a fundamental, yet critical fact for software-as-a-service businesses: the value of new customers is much higher than what is currently spent on acquiring it, and so profits for these high- pilots.
So far, however, investors have been more than willing to pay for the impressive top growth and the potential for explosive profits.