[Editor’s note: This story was previously published in Jan. 2019. It has since been updated and republished.]
When it comes to tech stocks a lot of ink has been spilled on the so-called FANG stocks. And for good reason. Leaders like Facebook (NYSE:FB) or Netflix (NASDAQ:NFLX) have been dominant forces in the sector and have shaken-up their respective technology subsectors since the end of the Great Recession. The problem is,as we continue to focus on the FANGs, plenty of other tech stocks have gone unnoticed. After all, there’s more to the technology sector than just Apple (NASDAQ:AAPL).
In fact, there’s a lot more.
Some of the best tech stocks continue to fly under the radar as the focus continues to be on FAANG stocks. For investors, looking at them could provide some of the best long-term growth potential around.
But which firms have the goods to help get your mind off the likes of Google (NASDAQ:GOOG) and NFLX?
Here are five tech stocks worth a look.
Tech Stocks That Are Not FANG: The Trade Desk (TTD)
Advertising today is nothing like an episode of Mad Men. As various digital platforms have exploded in use, marketers and advertisers have been forced to adapt to the shifting landscape. Helping them adapt to that shift and target the right customer at the right time is The Trade Desk (NYSE:TTD).
The idea behind TTD is simple enough. Dubbed “programmatic advertising,” Trade Desk will use high-speed computers and various algorithms to automate the process of ad buying in real time. By searching the nearly 20 digital-ad exchanges, TTD allows advertisers to instantly find exactly who they want to target their ad to — whether that’s on their computer, smartphone or other devices. Trade Desk’s programs are so fast and successful, they are able to place roughly 9 million ads per second through their online auctions.
In the end, it creates a much more efficient and cost-effective way for companies to reach consumers.
For TTD, this creates plenty of revenues and growth. As Trade Desk has been able to score more customers, the Trade desk saw its revenue jump by 56% year-over-year during the fourth quarter. The best part of that jump was that two of firm’s main growth engines — video and connected TV advertising — are just really getting started. That leaves plenty of room for TTD to continue its pace of huge revenue jumps. Even better, TTD stock is profitable.
All in all, the Trade Desk has what it takes to be one of the best tech stocks outside the FANGs.
Tech Stocks That Are Not FANG: Workday (WDAY)
Cloud computing has really changed the way we function these days. So, naturally, tech stocks leading the way into the cloud are worthy FANG replacements. And Workday (NASDAQ:WDAY) may be one of the best.
Human Resources is full of tedious tasks such as changing ACH payroll information, filling out expense reports or signing up for a retirement/401k plan. Often these things get in the way of allowing the HR staff to do meaningful work. WDAY makes a variety of applications for small or large businesses to cover these tasks. The best part is, like many cloud computing firms, a business can add as little or as much as they like. And rather than purchasing the service, they pay a reoccurring fee.
For Workday, this has all added up to some great growth. During Q4, WDAY saw a huge 35.4% jump to its total revenues, while subscriptions revenues came in at $673.5 million — a 30% year-over-year jump. The best part is that its subscription revenue backlog — that is, sales that are not officially booked, but will be as because companies have signed up for multi-term products — came in at over $6.7 billion.
With key high-margined products — such as WDAY’s business intelligence offering, Prism Analytics — growing like weeds, the pace of revenues should continue. Moreover, it should allow Workday to finally move into the black when it comes to GAAP accounting standards.
All in all, Workday is quickly becoming a go-to name in HR management. For investors, that makes one serious tech stock to have your portfolio.
Tech Stocks That Are Not FANG: Twilio (TWLO)
Want to forget the FANGs? A 278% return will help you do it. And that’s just what investors in Twilio (NASDAQ:TWLO) were treated to last year. That return was one of the best among all tech stocks — FANG’s included. There’s plenty of reasons why TWLO could see more gains ahead.
Twilio designs cloud-based communications platforms that allow developers to send automated phone calls, text messages, and other communication functions. For example, when you’re doing a bit of online shopping or banking and you see one of those chat boxes that allows you ask questions or find out more about a product or account, Twilio made that happen. The awesome part is that developers can simply take TWLO’s APIs and apps, chuck them into their code and instantly get the ability to add these functions. TWLO collects a fee when consumers use the functions.
And collect fees it does.
As of the end of the third quarter, TWLO had roughly 64,300 different customers using their apps. In Q4 alone, revenues jumped by 77% as both organic and new customer growth surged. And there’s still plenty of room to grow across a variety of customers.
Given the ease of TWLO’s products and the continued growth potential, it’s easy to see how the tech stock will a giant over the long haul. That’s assuming it doesn’t get bought out first.
Tech Stocks That Are Not FANG: Splunk (SPLK)
As technology has invaded our lives, we create a lot of data. In fact, we make so much of it, a new term “Big Data” was invented to describe the billions of gigabytes of info we generate. The problem for businesses is how to comprehend that data and dig into it to gain actual knowledge. Software firm Splunk (NASDAQ:SPLK) hopes to provide the answers.
At its core, Splunk provides a variety of tools and businesses intelligence software to collect, manage and analyze all the data various organizations make. This includes everything from machine learning and application analysis to cybersecurity and business analytics. The win is that SPLK’s applications are set-up to use a simple website-style interface. You don’t need to be a developer to use or understand the software.
Naturally, all of this love for Big Data has created some big revenues for the tech stock. In Q4, revenues jumped 35% year-over-year.
When it comes to tech stocks, Splunk is the reigning big data king.
Tech Stocks That Are Not FANG: Fortinet Inc (FTNT)
Not to be confused with the popular video game Fortnite, Fortinet (NASDAQ:FTNT) could be one of the best tech stocks out there. And that’s because of what it targets: cybersecurity.
With hacks, data breaches and other cyber threats on the rise, protecting a network is of utmost importance. And it’s only getting much more important as we move into the cloud, conduct more banking online and live more complicated digital lives. It’s FTNT’s job to make sure a company’s or your data doesn’t fall into the hands of hackers. It develops and markets various cybersecurity software as well as devices such as firewalls, anti-virus, intrusion prevention, VPNs and endpoint security products. Basically, all the stuff you’d need to build a secure network.
And given the high-profile nature of several recent data breaches, FTNT is supplying a lot of stuff. In Q4, its revenues grew at 22%. More importantly, the company’s 2019 EPS guidance came in well above the consensus outlook
With digital threats continuing to grow, Fortinet is poised to be one of the biggest winners among tech stocks.
Disclosure: As of the time of writing, Aaron Levitt held no position in any stock mentioned.
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