Unveiling Three Tech Titans with Millionaire-Making Potential
Wanting to discover potential millionaires-in-the-making in the tech sector? Might as well leave those trillion-dollar giants behind and delve into the lesser-known corners of the tech market instead. The key here is to uncover companies that are carving out defensible niches, establishing sticky ecosystems, and skyrocketing their growth at a rapid pace.
To zero in on these high-flyers, you might want to give some thought to these powerhouse stocks: Datadog (DDOG), Monday.com (MNDY), and Cloudflare (NET).
1. Datadog
The tech world is brimming with software and services, making it rather daunting for IT pros to effectively monitor a company's entire software infrastructure. Enter Datadog, which rides in to save the day by analyzing and displaying diagnostic data from a multitude of applications on unified dashboards. This gizmo serves up crucial information in real-time and makes it a cinch for IT pros to spot and fix potential glitches. To sweeten the deal, Datadog employs an AI assistant, Bits AI, to further speed up the process.
From 2019 to 2023, the revenue of this whiz-kid company has grown at a CAGR of 56%, with its roster of large customers (those dishing out at least $100K annually) skyrocketing from 858 to 3,190 during the same period. This growth spurt has also pushed the company into the black, turning a profit on a GAAP basis in 2023. Analysts are forecasting that Datadog's revenue and GAAP EPS will expand at a CAGR of 23% and 77%, respectively, from 2023 to 2026. Even though the stock appears to be priced at a lofty 68 times its forward-adjusted earnings, there’s bound to be plenty of room for growth as the IT observability market expands.
2. Monday.com
Monday.com gives companies the ability to create their very own work management apps right on its cloud-based platform, making it a breeze to automate tasks and integrate those apps into existing software applications. Monday.com can either build apps from scratch or create them using pre-built “recipes,” further simplifying the process for its users. And if you need some artificial intelligence features in your custom apps, Monday.com's Monday AI platform has got you covered.
From 2021 to 2023, this quick-thinking company has witnessed its revenue soar at a CAGR of 54%. The number of its big customers (those who bring in over $50K annually in recurring revenue) nearly tripled during this same period, going from 793 to 2,295 in 2023. To top it off, Monday.com turned a profit as its adjusted operating margin sailed into the black in 2023, and it maintained a healthy net dollar retention rate of 110% in its latest quarter.
Going forward from 2023 to 2026, Monday.com's revenue is projected to grow at a CAGR of 28%, as more companies jump on the digital transformation bandwagon. By 2024, the company is slated to turn a GAAP profit, with its GAAP EPS expected to surge at a CAGR of 118% for the two years following that. Though Monday.com's stock price may seem steep at 65 times its forward-adjusted earnings, its diversified exposure to the ever-expanding cloud, AI, and digital transformation markets may justify that premium valuation.
3. Cloudflare
Cloudflare is a cloud-based content delivery network (CDN) provider, which essentially means it makes the Web faster by serving up pre-cached digital content from edge networks that are situated closer to users than the origin servers. TheCDN also safeguards websites from bot-driven attacks by verifying human users. Cloudflare ultimately aims to become bad-guy repellent for the modern Internet by protecting websites, servers, and visitors from cyber villains. In 2020, it debuted Cloudflare One, merging its CDN and security services into a single platform.
Over the period of 2019 to 2023, Cloudflare has experienced a robust CAGR of 46%. At the close of its latest quarter, it boasted a strong dollar-based net retention rate of 110%. Analysts predict that Cloudflare's revenue will burst forward at a CAGR of 27% from 2023 to 2026. While Cloudflare has yet to turn a GAAP profit, it has been making strides in shrinking its net losses.
Though Cloudflare's growth is expected to cool down as the market matures and grapples with macroeconomic headwinds, its demand for services is set to skyrocket as more and more companies roll out content-heavy websites and shield themselves from malicious attacks. Despite its stock pricetag of 147 times its forward-adjusted earnings, Cloudflare has ample room to grow.
- Investing in companies like Datadog can be a promising venture in the finance world, especially considering its impressive revenue growth of 56% CAGR from 2019 to 2023, making it a potential millionaire-maker in the tech sector.
- Monday.com, another tech company with a strong finance background, has experienced a 54% CAGR in revenue from 2021 to 2023, indicating significant potential for investing and long-term gains in the tech industry.
