September 27, 2022

NORDchinaz

The Business & Finance guru

2 Innovative Growth Stocks That Could Turn $200,000 Into $1 Million

I love to hear the phrase “disruptive innovation.” Technologies that fall into that category tend to change the world, and the companies that build those technologies often create substantial wealth for shareholders. If you’re not convinced, consider the impact of smartphones and streaming media, then check the returns of stocks like Apple and Netflix.

Docebo (NASDAQ:DCBO) and HubSpot (NYSE:HUBS) appear to fit this mold, though perhaps more subtly than the tech giants I just mentioned. Regardless, I think the price of these two relatively young tech stocks could grow fivefold in the next decade. Here’s why.

Image source: Getty Images.

1. Docebo: Sizable opportunity and strong financial performance

In general, employees with access to ongoing learning opportunities tend to be more productive and more satisfied, which translates into better retention rates and (potentially) higher revenue for their employers. Unfortunately, traditional learning management systems (LMS) tend to be inefficient and inflexible.

To that end, Docebo is disrupting the LMS market with modern technology. Its AI-powered software helps clients create and deliver learning content, measure results, and analyze the impact of ongoing learning on business performance. More importantly, Docebo simplifies the process for employers, and it creates a more engaging experience for employees.

For example, Docebo Shape leans on artificial intelligence to convert corporate resources into training content, automating what has traditionally been a time-consuming process. And Docebo Learn allows clients to engage their workforce with both formal and social learning material, using AI to personalize the content for each employee.

Despite being a young public company, Docebo has already established itself as a strong competitor with a penchant for innovation. Case in point: It was one of the first companies to infuse its e-learning software with AI. Not surprisingly, that has helped the company grow its top line quickly.

Metric

Q2 2019 (TTM)

Q2 2021 (TTM)

CAGR

Revenue

$33.5 million

$82.2 million

57%

Source: Ycharts. TTM = trailing-12-months. CAGR = compound annual growth rate.

Looking ahead, Docebo is well-positioned to maintain this momentum. Management puts its addressable market at $29.9 billion by 2025, more than 350 times its revenue over the last 12 months. And that figure should continue to climb as more enterprises recognize the value of ongoing learning opportunities.

Here’s the bottom line: Given Docebo’s sizable opportunity and strong financial performance, I think this growth stock — which currently has a market cap of $2.5 billion — could surge fivefold in the next decade.

2. HubSpot: Adding customers and increasing revenue per customer

In 2006, HubSpot launched its first application, pioneering the concept of inbound marketing. The premise is simple: Unsolicited ads are irritating, and marketing is more effective when interested consumers search for the information themselves. To that end, HubSpot’s marketing tools help clients create websites, social content, and blogs, all optimized to attract web traffic.

Over the last 14 years, HubSpot’s ecosystem has expanded dramatically, becoming a full-fledged customer relationship management (CRM) platform, with solutions for sales, customer service, and content management. These products complement its inbound marketing software, helping clients engage leads and convert them into loyal customers.

More importantly, as HubSpot has added new products, the company has witnessed an acceleration in demand. Since 2017, its customer base has climbed from 42,000 to 120,000, growing at 36% per year. Over the same period, the number of customers with three or more products jumped from 6% to 30%.

In other words, HubSpot is not only adding new customers, but it’s also generating more revenue per customer. And that compounding effect has translated into a strong financial performance.

Metric

Q2 2018 (TTM)

Q2 2021 (TTM)

CAGR

Revenue

$441.4 million

$1.1 billion

34%

Free cash flow

$32.0 million

$144.5 million

65%

Source: Ycharts. TTM = trailing-12-months. CAGR = compound annual growth rates.

Looking ahead, HubSpot still has plenty of room to run. The company’s total addressable market currently sits at $87 billion, according to analysts at BofA Securities, and management is executing on an effective growth strategy.

Specifically, HubSpot recently launched Operations Hub, further expanding its software ecosystem (and market opportunity). This new product enables clients to sync data between applications and automate time-consuming tasks.

HubSpot’s innovative approach to marketing is clearly resonating with customers. If it can maintain top-line growth of at least 30% per year, this $37 billion company could easily grow fivefold over the next decade.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.


https://www.fool.com/investing/2021/10/18/2-stocks-that-could-turn-200000-into-1-million/