Nothing puts a smile on investors' faces like a high-growth stock. Not only will a stock in your portfolio that's returned 100%, 200%, or even 500% help you build wealth for the long term, but one big winner can also make up for several losing stocks. This makes high-growth investing an appealing strategy: You can buy several stocks, but you only have to be right once to get outsize returns.
Using a stock screener like Finviz can help you narrow down choices, especially when you're looking for stocks that have delivered large returns and have high revenue growth. With the help of Finviz, I found three stocks that tripled over the last year, have strong revenue growth, and continue to have bright prospects.
Here's why The Trade Desk (NASDAQ: TTD), Twilio (NYSE: TWLO), and MongoDB (NASDAQ: MDB) are three of the highest-growth stocks in the market today.
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1. The Trade Desk
The Trade Desk is a "self-service omnichannel software platform" that helps clients purchase digital advertising inventory and manage ad campaigns. For investors looking for a way to capture the massive growth in digital advertising that has made behemoths out of Alphabet and Facebook, Trade Desk is a great way to do it.
The stock is up 288% over the last year on a series of blowout earnings reports, and unlike many fast-growing stocks, The Trade Desk is profitable. Over the last year, the company saw revenue jump 55% to $477.3 million, and adjusted net income surged from $70.4 million to $123.8 million.
Trade Desk has continued to gain market share in its industry. Its platform offers a number of competitive advantages, including switching costs, as ad agencies are unlikely to switch to a competitor once they get accustomed to using it. Customer retention has been over 95% for more than five years. The company has capitalized on emerging markets like connected TV, where revenue jumped ninefold last year. And it's pursuing opportunities in China, where Trade Desk recently partnered with some of the country's largest internet companies, allowing it to tap into growth opportunities in the fast-growing market.
For the year ahead, the company expects revenue of $637 million, up 33% from last year, though its guidance has historically been conservative. Trade Desk shares carry a lofty price-to-earnings ratio of 73, but considering the company's track record and its long-term opportunity, the stock could move plenty higher from here.
Cloud stocks are hot, and Twilio is no slouch here. Twilio helps companies communicate with their customers via text, audio, video, and now (since a recent acquisition) email. Twilio provides services like handling communications for Uber when a rider gets a message from a driver, or for restaurants when they notify customers that a table is ready.
Meeting that underserved market has allowed Twilio stock to explode: Shares are up 245% over the last year, and more than 400% over the last three years. Revenue last year jumped 63% to $650.1 million, and even accelerated, rising 77% in the fourth quarter. Twilio's dollar-based net expansion rate, which measures the revenue from one cohort of customers from year to year, was 140% last year and 147% in the fourth quarter, meaning the company's business is growing by expanding its current relationships as well as by adding new customers.
It also recently closed on its acquisition of SendGrid, which has given it email capabilities, and should help fuel more growth.
Twilio is not yet profitable on a GAAP (generally accepted accounting principles) basis; the company is spending heavily on both research and development, and sales and marketing, in order to drive growth. It was marginally profitable last year on an adjusted basis, with net income of $11.5 million after backing out expenses like stock-based compensation.
Looking ahead, management expects rapid growth. The company forecasts revenue of between $1.065 billion and $1.077 billion for this year -- an increase of 65% at the midpoint -- and adjusted earnings per share of $0.08 to $0.11.
Another company benefiting from the surge in cloud computing is MongoDB. The company revolutionized the enterprise database industry a decade ago with the launch of NoSQL databases, which are structured very differently from SQL (Structured Query Language) databases. Recent results show that MongoDB is doing it again with Atlas, its new cloud-based "database-as-a-service" product.
Last year, the company saw revenue jump 61% to $267 million, but revenue growth was even faster in the fourth quarter, increasing 71% to $85.5 million. That acceleration was largely due to blowout performance from MongoDB Atlas, which saw revenue jump more than 400% to contribute 32% of MongoDB's total revenue. Atlas now has an annual revenue run rate of more than $100 million, just three years after its launch. For the year ahead, the company sees the top line growing about 37% this year to between $363 million and $371 million, though given the explosive growth from Atlas, that guidance could prove to be conservative.
Also boosting MongoDB's long-term growth prospects is its strong developer adoption. Nearly 1.2 million developers have registered for its online training program, MongoDB University. And downloads from its website have now topped 60 million, with more than 20 million coming last year.
MongoDB is still operating at a loss as the company spends aggressively on both sales and marketing, and research and development. But its margins are improving, and the nature of cloud-based subscription, which tends to offer high margins once it reaches maturity, should eventually lead to profitability.
Go with growth
All three of these stocks trade at lofty valuations, but it's easy to see why. These high-growth stars are all leaders in their respective niches, demonstrate competitive advantages, and have huge growth opportunities ahead, thanks to their positions in emerging technologies and markets.
These stocks, especially the two that are unprofitable, remain vulnerable to a pullback on a recession or a market crash. But over the long run they should outperform the market, as they continue to build momentum and strengthen their competitive advantages.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors.