Discover Three Booming Businesses to Invest in and Maintain for an Upcoming Decade
In the bustling tech industry, some stocks truly shine, but not all that sparkles is gold. Chasing the latest trends can often lead to long-term losses. Instead of blindly investing in high-growth companies, smart investors should seek out businesses with innovative models and robust competitive advantages, often referred to as 'moats.' I've got my eye on three such stocks: cybersecurity giant Zscaler (ZS), AI analytics innovator Innodata (INOD), and fintech pioneer SoFi Technologies (SOFI).
Zscaler
Zscaler's unique selling point is its zero-trust cybersecurity services, treating every potential threat as a real one, even the CEO's email. Unlike competitors relying on traditional on-site appliances, Zscaler's cloud-native services are stickier and easier to scale, making them a natural fit for businesses expanding their cybersecurity needs.
ZS
Over recent years, Zscaler's revenue has surged, growing at a staggering compound annual growth rate (CAGR) of 48% from 2019 to 2024. Simultaneously, Zscaler's adjusted net income grew at a CAGR of an astounding 76% during the same period. The stock has boomed, climbing over 250% in the past five years.
While the growth rates are starting to slow down, forecasts point to continued expansion as more cyber threats emerge. Analysts forecast a revenue CAGR of 21% from 2024 to 2027. Despite its current valuation of 12 times this year's sales, Zscaler's high growth potential may justify the seemingly lofty price tag.
INOD
Innodata
Once seen as a slow-growing and small analytics company, Innodata shook things up in 2018 with the launch of its suite of microservices to help prepare data for AI projects. With AI-fueled projects often requiring 80% time for data preparation and only 20% for actual algorithm training, Innodata's services can save tech giants valuable resources.
SOFI
Innodata's revenue has steadily grown from 2019 to 2023, increasing at a CAGR of 12%. But the future looks even more promising as analysts expect a revenue CAGR of a jaw-dropping 42% from 2023 to 2026, along with a net income CAGR of 23% over the following two years.
Trading at just 6 times next year's sales, this growth stock potentially has room to expand even further as the AI market soars.
SoFi Technologies
SoFi recently joined the ranks of one-stop solutions for users' financial needs, offering personal loans, credit cards, insurance services, estate planning tools, and stock investment services. The company also launched its own digital bank after securing a U.S. bank charter in 2022.
cloud-native services, which are stickier and easier to scale as an organization expands.
SoFi's membership base has exploded, quadrupling from 2.52 million in late 2020 to 10.13 million in late 2024. Its payment processing subsidiary, Galileo, hosts 168 million accounts as well. Despite challenges like paused student loan payments and rising interest rates, SoFi's adjusted revenue grew at a phenomenal CAGR of 43% over those four years.
SoFi continued to thrive even under these conditions, but with the student loan repayment freeze now lifted and interest rates stabilizing, the company is well-positioned for even faster growth. Analysts expect a revenue CAGR of 20% and a net income CAGR of 9% from 2024 to 2026.
AI applications. When a large company develops a new AI project, it often spends 80% of its time preparing that data and just 20% of the time training the actual AI algorithm.
SoFi's current valuation of 5 times this year's sales makes it an attractive choice for investors eager to tap into the expanding fintech market.
- Smart investors looking for potential investments in the finance sector might consider Zscaler (ZS), given its impressive growth in revenue and adjusted net income over the past few years, along with its expansion in the cybersecurity market. [href]
- While analyzing investing opportunities in the technology industry, one cannot overlook the innovative business model and robust competitive advantages of Zscaler, as highlighted by its high compound annual growth rates and surge in stock price.
- Innovative AI applications in the tech industry have created new opportunities for stocks like Innodata, which offers microservices that help prepare data for AI projects, saving valuable resources for tech giants. [AI applications]
- Investors interested in the fintech sector might find SoFi Technologies an interesting investment, given its diversified offerings of financial services and the substantial growth it has experienced in its membership base and revenue, despite facing challenges like paused student loan payments and rising interest rates. [cloud-native services]