Investment in growth stocks can be a great way to build massive wealth from the stock market. These stocks usually deliver above-average returns over time due to the consistent performances of their underlying businesses. For patient investors, the current downturn presents an excellent opportunity to pounce on growth stocks trading at a substantial discount.
The top companies to invest in can post high revenue growth even during a bear market. The stocks discussed in the article have exhibited strong revenue and earnings growth over a sustained period. Moreover, their fundamentals remain rock-solid despite the current downturn and are trading at a significant bargain.
A small investment in the right growth stocks can take your portfolio to the next level.
|TTD||The Trade Desk, Inc.||$46.30|
|UPST||Upstart Holdings, Inc.||$35.14|
Growth Stocks: Zscaler (ZS)
Zscaler (NASDAQ:ZS) is a leading cybersecurity play that operates as a software-as-a-service (SaaS) business that enables various enterprises to keep their data safe. Its business has been growing at a breathtaking pace, with over 5,600 customers and 150 data centers that operate like “intelligent switchboards.” Moreover, it has partnerships with the juggernauts in the cloud sector, including Amazon (NASDAQ:AMZN) Web Services and Microsoft (NASDAQ:MSFT) Azure.
It’s been growing revenues impressively over the past several years. Sales growth has averaged over 53% in the past five years, significantly ahead of the sector median. Recent results have been equally remarkable, a testament to its high retention and product quality. ZS stock remains an excellent long-term bet with double-digit growth in cloud security over the next few years.
Snowflake (NYSE:SNOW) is a key player in the data warehousing space with a market cap of over $35 billion. It is exposed to secular tailwinds from the burgeoning business intelligence space, making long-term growth sustainable. Additionally, it has a whopping cash balance of over $3.8 billion with minimal debt, which allows it to sustain its operations during a downturn.
Since its IPO a couple of years ago, it has transitioned from a data warehousing business to a cloud company. The change has unlocked a total addressable market worth over $200 billion compared to the relatively limited data warehousing sector. Data cloud enables various companies to have a one-stop-shop experience managing their data needs on Snowflake’s platform. The change has been a game-changer for the business, resulting in a $327 million and $627 million bump in sales over the past couple of years. Moreover, the company is now cash-flow positive, which gives it greater flexibility to expand its offerings in the future.
ServiceNow (NYSE:NOW) is a cloud-based platform that effectively simplifies workflows for businesses. Between 2016 and 2021, its enterprise customer growth shot up 105.55% to 7,400. Moreover, revenues climbed from $1.2 billion to $5.8 billion.
NOW has significantly improved its ecosystem with a laundry list of acquisitions. Moreover, the shift towards remote working has generated long-term tailwinds for its business. Revenue growth has averaged over 30% over the past five years for NOW. Moreover, subscription and net expansion rates have also grown by double-digits during the period. It expects to generate an incredible $16 billion in sales by 2026. The forecast represents over a 20% CAGR over the next five years. Therefore, with a massive growth runway ahead, NOW has plenty of upside ahead.
Growth Stocks: Twilio (TWLO)
Twilio (NYSE:TWLO) operates as a cloud-communications-as-a-service provider that handles calls, videos, messages, and authentication features for various mobile apps. Developers outsource these features to Twilio instead of building them from scratch, thereby saving costs. The company served just 28,000 customers back in 2016, which has ballooned to over 250,000. Moreover, sales grew immensely in the past five years to $2.8 billion last year, from $277 million in 2016.
The company solutions are embeddable using APIs, which stand for Application Program Interface. It is essentially a modern and standardized way for customers to connect and communicate with their customers. Therefore, its product offering is a future essential for businesses, which is why it expects the total addressable market to sky-rocket over the next several years.
The Trade Desk (TTD)
The Trade Desk (NASDAQ:TTD) is a cloud-based platform that helps companies in buying digital advertising. Online traffic has increased substantially over the past decade, especially during the pandemic years, which has increased the importance of digital advertising channels. The trend allowed TTD to grow its revenues from $114 million in 2015 to a whopping $1.2 billion last year.
In 2021, advertisement spending was at a colossal $763 billion, and TTD’s revenues form only a fraction of the overall industry. Nevertheless, revenue growth is back above pre-pandemic levels after a torrid couple of years. More importantly, margins continue to trend higher, with a healthy increase in free cash flows. TTD’s gross margins have averaged almost 80% over the past five years, with over a 20% return on equity over the same period. With such a stellar margin profile, the firm continues to grow its internal reserves and expand its market share.
Upstart Holdings (UPST)
Upstart Holdings (NASDAQ:UPST) is a leading fintech firm that uses AI to originate loans for banks. Its goal is to provide a fairer lending experience for the lenders and borrowers by offering a more broad-based credit scoring system.
Upstart’s service has caught on quickly and now covers multiple profitable verticals in its niche. It started off with unsecured loans primarily for medical reasons, among other things. By last year, it entered the more lucrative automotive loan market and most recently showed interest in the small business lending and the mortgage industry. Consequently, its total addressable market continues to grow, and it could now swim in a market worth over $5 trillion.
It runs a highly profitable operation, and the first quarter marked the seventh consecutive quarter of positive earnings. At the heart of its stellar results is its humongous transaction volume, up 174% to $4.5 billion during the first quarter.
Growth Stocks: Snap (SNAP)
Social media giant Snap (NYSE:SNAP) has been taking a hammering of late after its downward revision of its upcoming second-quarter results. It blames the challenging macroeconomic conditions for the downgrade but still has plenty of opportunities to grow over the long term.
Moreover, its guidance for 343 million to 345 million daily active users during the second quarter, still represents 17% to 18% growth from the prior year. The business is expanding incredibly while its ads face multiple headwinds. Once these headwinds go away, revenue and adjusted EBITDA could effectively stabilize again.
Demand for its ads remains high, and the company revealed that commitments from its agency partners have risen over 60% from the prior-year period. Additionally, It plans to expand beyond its traditional ads by leveraging the power of augmented reality, games, and newer elements. It also had plenty of cash to pursue these plans, with its operating free cash flows turning positive for the time last year
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.