There is no better way to increase your fortune than investing in growth stocks at justifiable prices. In today’s overvalued market, identifying reasonably priced growth stocks is no small feat, but fear not. Below, we will delve into a few selections that stand out due to their growth potential and profitability, both of which can outweigh their current stock price.
CrowdStrike: A Leader in Cloud-Native Endpoint Security
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CrowdStrike (NASDAQ:CRWD) has taken the lead as a cloud-native endpoint security platform. Unlike its peers who have just begun integrating AI, this powerhouse has been doing so for a decade. Utilizing advanced artificial intelligence and machine learning, its Falcon platform offers real-time threat detection and automated responses.
As cyber threats become more complex and frequent, CrowdStrike has emerged as a critical defense for businesses globally. It has solidified its position as the AI-native security platform, serving multiple cyber end markets including endpoint security, observability, cloud security, and managed services.
Due to its dominance in cloud endpoint security, CrowdStrike has experienced rapid expansion in its customer base. Furthermore, its high retention rate and increasing revenues from customer adoption of additional Falcon modules have driven tremendous success. Subscription annual recurring revenue skyrocketed from $71 million in Q1 fiscal year 2018 to $3.15 billion in Q3 FY2024.
Despite CRWD stock’s remarkable surge with subscription revenue growth in the first three quarters of FY2024, up 37%, management foresees sustaining this momentum. Their optimism is rooted in the expected growth of the total addressable market, from $100 billion to $225 billion in 2028.
Datadog: Pioneering Integrated Cloud-Scale Monitoring and Analytics
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Datadog (NASDAQ:DDOG) once again reported an impressive quarterly report on Feb. 13, with revenues climbing 26% year-over-year to $589.6 million. Despite initial stock sell-offs, any dips in this growth stock present a buying opportunity.
Over the past five years, Datadog has solidified its position in cloud-scale monitoring and analytics. It offers an integrated platform that monitors servers, databases, tools, and services via a software-as-a-service data analytics platform, empowering companies to enhance operational performance and ensure service high availability.
As companies transition to cloud computing, the demand for Datadog’s services is projected to soar. The International Data Corporation (IDC) foresees cloud spending growth averaging 19.9% annually through 2027. With its comprehensive monitoring solutions across cloud providers, servers, databases, and applications, Datadog is poised to capture a portion of these cloud budgets.
A closer look at its latest results confirms that this growth stock shows no signs of slowing down. Apart from the 26% revenue growth, customer expansion is also impressive. Customers with an ARR of $1 million or more surged from 317 in 2022 to 396 as of Dec. 31, 2023. Over the same period, customers with an ARR of $100,000 or more grew from 2,780 to 3,190 – a 15% increase.
Datadog’s growth is driven by the secular shift from on-premises to the cloud. Management anticipates revenue of $2.555-$2.575 billion in FY2024, representing at least 19.9% growth. The company has consistently surpassed expectations and is expected to do so again.
XP: Harnessing the Potential of Emerging Market Capital Markets Development
XP Inc. (NASDAQ: XP) is making full use of the opportunities arising from emerging market capital markets development. This company has built a sturdy strategic position in these markets and is set to witness enormous growth and success.
These three stocks are indeed making waves in their respective sectors with their promise of explosive growth and future prosperity. With their unwavering innovation, expanding markets, and robust financial performances, these companies are poised to entice growth investors and enrich their investment portfolios.
XP: Transforming Brazil’s Financial Services Landscape
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Brazil’s financial market is ripe for disruption, and XP is at the forefront of this transformation. Its customer service and innovative technology position it well to capture Brazil’s growing demand for financial services. Furthermore, this stock for growth is a play on capital market development, a secular trend the company will capitalize on.
Impressive Growth Trajectory
In 2023, XP showed impressive growth in the client base, assets under management (AUM), and revenues. It reached an important milestone in the third quarter, achieving 1 trillion BRL ($201 billion) in client assets. Revenues are accelerating, with 10% growth in the June 2023 quarter and 22% growth in September 2023.
Diversification and Expansion
Furthermore, it is seeing tremendous growth in new verticals like retirement plans, insurance, and credit cards. In Q3 2023, these verticals grew 52% YOY from 291 million to 442 million BRL.
This growth is a testament to the company’s strong value proposition. XP is well-positioned to capitalize on the expanding financial services market in Brazil. New verticals like credit cards and insurance are growth opportunities that will turbocharge growth.
On the date of publication, Charles Munyi 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.
