There is a reason why equity investors are forever on the lookout for growth stocks. Companies that are able to consistently multiply their revenue and earnings generally tend to outperform the broader market over time…
However, these stocks trade at a premium which makes them vulnerable in a bear market. Yet, growth stocks remain the best investment vehicle for people who are looking to accelerate their retirement plans and have a long-term horizon.
Here, we take a look at three such growth stocks that have gained significantly in 2020 but should continue to rally in 2021 and the upcoming decade.
A programmatic advertising giant
The first growth stock on the list is The Trade Desk (TTD – Get Rating), a leader in the programmatic ad space. Shares of TTD have surged a staggering 260% year-to-date and are up 3,273% since its IPO in late 2016. TTD’s forward price-to-sales multiple is 54.2x.
Despite lower digital advertising budgets for enterprises in 2020 amid the pandemic, TTD has beaten Wall Street estimates in the last three quarters to trade at a higher valuation. Now as the global economy recovers in the next 12-months, TTD is well poised for accelerating revenue growth.
The shift towards online shopping and streaming services remain long-term revenue drivers for TTD. The rise in adoption of connected TV is a huge market opportunity for The Trade Desk. Further, advertising is one of the key engines of economic growth and TTD’s customers understand customized ad campaigns can go a long way in increasing sales.
In Q3, the company’s revenue was up 32% year-over-year at $216 million, and net income rose over 100% to $41 million. Ad sales from the CTV sales were up 100% as well.
A remote work enabler
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