2 smart growth stocks to buy now

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Many companies are stepping up their digital transformation efforts in the wake of the pandemic. They adopt new technologies and modernize outdated processes in an effort to bring value to their customers. Of course, this doesn’t happen overnight, and it doesn’t come cheap.

Between 2020 and 2023, global companies will spend $ 6.8 trillion on digital transformation, according to International Data Corp. This puts investors in front of a great opportunity. With that in mind, these tech companies play a key role in helping their customers adapt to digital work, and both look like smart long-term investments.

Image source: Getty Images.

1. Pager service

More and more businesses are engaging with consumers through digital channels, which means it’s critical that websites, mobile apps, and various other technologies stay up and running at all times. Pager (NYSE: PD) specializes in managing digital operations, acting as a central nervous system for the modern business.

Specifically, its platform sits at the center of a company’s digital ecosystem, ingesting data from virtually any software-enabled system and device. PagerDuty relies on artificial intelligence to analyze these signals, helping customers predict and avoid costly downtime. When issues are identified, the platform automatically corrects them or alerts the appropriate team members and provides them with the necessary information.

As a pioneer in the industry, PagerDuty has an advantage over its competition. The company has nearly 12 years of data, and each data point improves its AI models to predict incidents and automate their resolution. This advantage has been a major driver of growth. Over the past two years, PagerDuty has shown impressive results – and while free cash flow remains negative, things are moving in the right direction.

Metric

Q2 2020 (TTM)

Q2 2022 (TTM)

TCCA

Returned

$ 142.7 million

$ 244.2 million

31%

Free movement of capital

($ 7.5 million)

($ 6.4 million)

N / A

Source: Ycharts. TTM = 12 rolling months. CAGR = compound annual growth rate. Note: Q2 2022 ended July 31, 2021.

PagerDuty may not be a household name for many investors, but over the past quarter the company has expanded its relationships with several notable clients, including Datadog, NVIDIA, and Snowflake. PagerDuty is also gaining ground outside of its core geography, as international revenue now accounts for almost 25% of total sales, up from 20% in Q2 2018.

It is good to see the company implementing a solid growth strategy. And management assesses the market opportunity at $ 25 billion, leaving PagerDuty plenty of room to operate in the years to come. This is why this growth action looks like a smart buy.

2. Sales force

As more businesses strengthen their digital presence, consumers are faced with an unprecedented number of choices for just about everything: where they eat, where they shop, what to watch and more. . For this reason, it is now more important than ever for businesses to build and maintain strong relationships with their customers.

Salesforce.com (NYSE: CRM) is the best in the industry when it comes to customer relationship management (CRM). Its cloud-based software platform is designed to improve sales, service, marketing and commerce, helping every department deliver a great customer experience in all situations.

Salesforce also relies on artificial intelligence to help its customers work more productively. For example, AI helps sales agents identify promising leads, helps service agents create smart chatbots, and helps marketing teams create personalized content.

However, if you only know one thing about Salesforce, it should be this: The company has a 19.5% market share in the CRM industry, more than the next four competitors combined. This dominance has helped Salesforce grow quickly. In fact, the company generated $ 20 billion in revenue faster than any other software-as-a-service provider in history. And despite its market cap of $ 252 billion, this company continues to show strong double-digit growth like clockwork.

Metric

Q2 2020 (TTM)

Q2 2022 (TTM)

TCCA

Returned

$ 14.7 billion

$ 23.5 billion

26%

Free movement of capital

$ 3.2 billion

$ 5.5 billion

31%

Source: Ycharts. TTM = 12 rolling months. CAGR = compound annual growth rate. Note: Q2 2022 ended July 31, 2021.

Salesforce recently completed the acquisition of Slack, a business communications platform. If its past success with mergers is any indication, this move will be another stroke of genius. Salesforce acquired integration specialist MuleSoft in 2018 and analytics specialist Tableau in 2019, and both have gained traction with customers.

Now, with Slack as the new interface for the Salesforce Customer 360 platform, customers can more easily connect with each other, with their customers and with their partners. That’s why it seems like now is the time to add this growth stock to your portfolio.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.


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