There is a simple yet powerful formula for market-crushing returns:
- Find elite businesses with attractive growth prospects.
- Buy their stocks and tuck them away in your long-term investment portfolio.
- Strive to hold their shares for as long as they continue to outperform the competition.
The tough part tends to be No. 1 (although No. 3 can be tough for the impatient investors out there).
To help you in your search for these fortune builders, here are three outstanding businesses to consider investing in today.
1. CrowdStrike
As the world shifts to the cloud, effective cybersecurity solutions are quickly becoming indispensable for companies large and small. CrowdStrike (CRWD) is a trusted ally for businesses seeking to prevent malicious actors from penetrating their cloud networks.
CrowdStrike excels at protecting endpoints such as mobile devices, point-of-sale systems, and Internet of Things (IoT) sensors. A boom in remote work during the pandemic has highlighted the importance of endpoint security, and CrowdStrike is a recognized leader in this increasingly vital area.
Advanced artificial intelligence (AI) helps to separate CrowdStrike’s platform from the competition. By analyzing more than 2 trillion cyber events each day, the cyber guardian’s machine learning technology continuously gets smarter. When CrowdStrike finds a new threat, it updates its network in real time to shield its customers.
Demand for these cybersecurity services is surging. CrowdStrike’s revenue climbed 35% year over year to $786 million in the quarter ended Oct. 31. Its free cash flow, in turn, rose 37% to $239 million.
Investors can expect these figures to grow steadily. Chief Financial Officer Burt Podbere sees CrowdStrike’s annual recurring revenue increasing from $3.2 billion to $10 billion within the next seven years.
2. Netflix
Following torrid growth during the early stages of the pandemic, Netflix’s (NFLX) pace of expansion slowed when people resumed engaging with traditional forms of entertainment. But the streaming king is back to its winning ways. Netflix is adding subscribers at a rapid clip once again, and its profits are soaring.
Netflix gained 13.1 million paying customers in the fourth quarter. The company ended 2023 with over 260 million paid subscribers. Netflix is seeing encouraging results with its new ad-supported plans, which are proving popular with increasingly cost-conscious consumers.
These customer gains, combined with moderating content spending, boosted Netflix’s full-year operating income by an impressive 23% to $7 billion in 2023. Management expects the company’s operating margin to rise to 24% in 2024, up from 21% in 2023 and 18% back in 2022.
This rapidly improving profitability is enabling Netflix to invest in prized content while its loss-making competitors are being forced to cut back. For example, the streaming leader is gearing up to broaden its entertainment offerings with popular live events like WWE’s Raw. As Netflix prepares to press its advantages over its rivals, its stock is poised to outperform.
3. Nvidia
The AI boom is a bonanza for Nvidia (NVDA). The semiconductor titan designs what are widely viewed as the best AI chips available in the world today. It’s a highly lucrative position to command — and one that should continue to pay dividends for Nvidia’s shareholders for many years to come.
Nvidia’s cutting-edge technology helps to power advanced AI applications, such as OpenAI’s ChatGPT and Adobe‘s popular Firefly image generator. Companies like Meta Platforms are loading up on Nvidia’s chips to train their AI models in their cloud data centers. Nvidia also recently debuted a slate of powerful graphic cards that are expected to capture a sizable share of the nascent yet potentially massive market for chips that can run AI applications directly on personal computers.
The tech giant’s sales, in turn, are projected to soar by 101% in 2024 and 58% in 2025. That’s an incredible pace of expansion for a $1.5 trillion behemoth with $45 billion in trailing-12-month revenue. Buy Nvidia shares today, and you can hitch a ride on this spectacular growth horse.
— Joe Tenebruso
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Source: The Motley Fool