Ambitious investors always explore companies that are not just adapting to change but shaping the future of their industries, setting the stage for explosive growth and potential fortunes. The article shines a spotlight on three such stocks to buy that are poised to leave an indelible mark in their respective fields.
These companies are utilizing advanced technology to reshape their industries. They shine in sectors such as cybersecurity and customer engagement, and are able to achieve remarkable growth through pricing strategies and surging subscriptions. Let’s dive deeper into these three stocks to buy that could make you a millionaire one day.
SentinelOne (S)
SentinelOne (NYSE:S) pioneered the world’s first purpose-built AI-powered cybersecurity platform, providing autonomous defense for enterprises. This innovation includes the introduction of the industry’s first autonomous AI agent, which integrates data and security with self-healing capabilities.
Notably, this innovation’s value is reflected in the company’s impressive financial metrics. For instance, in Q2 fiscal 2024, SentinelOne reported an impressive 47% YoY growth in Annual Recurring Revenue (ARR). The company’s gross margin also reached a new record of 77%, showcasing the scalability of its business model.
Additionally, SentinelOne operates in a massive $100 billion addressable market for cybersecurity solutions, with win rates in competitive evaluations remaining strong, even against large next-gen competitors. Its unified platform architecture helps enterprises consolidate spending on multiple security vendors and consoles, reducing complexity and streamlining operations. The company’s technology resonates with customers, as evidenced by favorable feedback and top rankings in categories like EDR, MDR and cloud workload protection.
Furthermore, the company’s customer base continues to grow, with over 11K customers and a significant increase in customers with more than $100K in ARR. SentinelOne’s platform approach is a source of growth through expansion, driving a net retention rate of more than 115%. The company’s platform solutions beyond endpoint security account for over one-third of its quarterly bookings, illustrating the diversity of its business mix.
Finally, SentinelOne’s partnership ecosystem has significantly contributed to its growth, particularly with Managed Security Service Providers (MSSPs). The demand for managed security services remains strong and SentinelOne’s platform capabilities make it a foundational platform for MSSPs. The company’s quarterly growth with MSSP partners is remarkable, with notable YoY increases in business volume. Overall, its fundamentals offer potential for significant expansion and growth, making this an ideal option in stocks to buy.
Yext (YEXT)
Yext’s (NYSE:YEXT) Digital Experience Platform (DXP) is a core strength that positions the company for rapid growth. The DXP enhances digital experiences for businesses across owned and third-party channels. It is powered by AI and knowledge graph technology, making it a cutting-edge solution for customers.
Yext Content, a key DXP component, is an AI-led headless content management system. It simplifies experience generation across multiple channels, making it more efficient and effective. Yext’s DXP includes AI-generated responses to reviews, which is crucial for businesses as consumer decisions often hinge on reviews. This feature allows companies to scale small teams and respond to reviews efficiently, improving brand reputation and customer engagement, making Yext a top selection of stocks to buy.
Despite economic challenges, Yext’s direct business has grown in customer count, ARR and direct ARR. For instance, in Q2 fiscal 2024, Yext’s net solid retention rate for direct customers (98%) and third-party resellers (92%) indicates that customers continue to see value in its products, leading to renewals and expansions. As a result, Yext has significantly improved its gross margin, which is now at 79%.
Moreover, Yext’s go-to-market strategy and customer acquisition efforts are another fundamental strength. Yext has achieved upsells with existing customers, showcasing its ability to identify and solve customer pain points. It’s not only retaining but also expanding its relationships with customers. Also, Yext has secured new customers, demonstrating that its solutions are attractive to businesses across various industries. The ability to win new logos indicates a strong market presence and demand for its products.
Yext’s marketing campaigns have effectively expanded its reach and market awareness. The 500% increase in event registrations and engagement with new contacts reflects the successful alignment of marketing efforts with target audiences. Fundamentally, Yext aligns its actions with its vision of sustained growth and shareholder value creation.
Arlo (ARLO)
Arlo (NYSE:ARLO) has strategically pivoted towards becoming a service-oriented business, expected to yield substantial long-term benefits. To begin with, Arlo’s shift towards a service-centric model has been underpinned by impressive subscription growth. In Q2 fiscal 2023, Arlo reported a 55% YoY increase in paid accounts, reaching 2.3 million subscribers. This subscription surge signifies Arlo’s ability to attract and retain customers seeking its services.
Also, the growth in paid accounts has directly translated into service revenue, which recorded a remarkable 54% YoY increase, reaching $50 million. This robust growth in service revenue highlights the company’s capacity to monetize its subscriber base effectively.
Strategically, Arlo’s pricing transformation, implemented in Q4, has driven subscription growth. Arlo has successfully reduced customer entry barriers by lowering hardware pricing while raising subscription service pricing and enhancing its service value proposition.
One significant outcome of this pricing strategy is the inelasticity in subscription pricing, demonstrating the enduring value Arlo’s services offer its customers. This approach not only stimulated demand but also had no significant impact on churn, reinforcing the durability of Arlo’s subscriber base.
Arlo’s outlook is positive, with promising growth opportunities on the horizon. The company plans to launch a new low-cost security camera platform during the upcoming holiday season, strategically timed to capitalize on seasonally strong demand. In the same context, Arlo has set ambitious revenue targets for the future. The company expects full-year service revenue to grow nearly 50% YoY. The non-GAAP service gross margin is projected to remain around 75%.
Finally, Arlo’s transition to a service-oriented business model has led to remarkable subscription growth, strategic pricing successes and impressive financial performance.
On the date of publication, Yiannis Zourmpanos did not hold (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.
