As the imminent bull market looms, these value-for-money growth stocks are primed to skyrocket. The S&P 500 has dramatically recovered from its bear market nadir due to tapering inflation. The reference index now only lags by 7% from its historical peak, marking it tantalizingly close to the bull market zone, an encouraging prospect for investors.
Historically, the S&P 500 has averaged a return of 186% across the nine bull markets since 1970, as revealed by Hartford Funds. Regardless of whether the open bull market commences in a week, a month, or a year, investors can bank on its onset to propel numerous stocks significantly higher.
Here are two great growth stocks to procure before the surge.
1. HubSpot
Specializing in customer relationship management (CRM) software, HubSpot (NYSE: HUBS) offers a comprehensive platform, including productivity applications for marketing, sales, service, and operations teams. It further incorporates solutions for content management, commerce, and workflow automation, empowering businesses to cultivate enduring customer relationships through pleasant experiences at each step of the customer journey.
HubSpot has carved out a considerable niche within the CRM industry through its tailor-made products for small and medium-sized businesses, an often neglected market segment. Rather than relying heavily on acquisitions like Salesforce, HubSpot develops the majority of its software in-house, ensuring seamless integration. It also adopts a freemium pricing model, enabling users to trial products for free and upgrade as their requirements and businesses evolve.
The first quarter saw HubSpot posting robust financial results. The customer base expanded by 23% to 177,298, and the average subscription revenue per customer grew by 3%. Consequently, revenue surged by 27% to $502 million, and the non-GAAP (adjusted) earnings skyrocketed by 107% to $1.20 per diluted share. With a history of impressive financial performance, investors have ample reason to believe in HubSpot’s continued momentum.
Known for its exceptional innovation capabilities, HubSpot has expanded from its origins as a marketing software in 2006 to a comprehensive CRM software suite, adding new products such as Content Assistant and ChatSpot.ai earlier this year. These AI-based tools assist sales and marketing teams with content creation for websites and ad campaigns and help employees complete diverse tasks.
HubSpot’s innovation capabilities are not only reinforcing its leadership among small businesses but also aiding it in attracting more prominent clients. Per management’s expectations, its addressable market will surge from $45 billion in 2022 to $72 billion by 2027.
Currently trading at 14.1 times sales, slightly below the five-year average of 14.9 times sales, shares present a compelling buying opportunity for patient investors.
2. Okta
Okta (NASDAQ: OKTA), an identity and access management (IAM) specialist, aims to securely connect the right people with suitable applications at the appropriate time through its cybersecurity framework. Its platform allows administrators to assign employees, contractors, and customers access to corporate resources, using AI to authenticate and authorize these users based on various factors.
Regarded as the “most comprehensive” IAM solution by its management, the Okta Identity Cloud caters to workforce and customer identity use cases, featuring the “broadest and deepest” set of pre-built integrations. Such advantages have thrust Okta to the forefront of the IAM industry, with Consultancy Gartner recognizing Okta as a leader in access management for six consecutive years.
The first quarter saw Okta delivering a solid performance. The customer count rose 14% to 18,050, with the average customer spending increasing by 17%. As a result, revenue grew by 25% to $518 million, and the company reported a record cash inflow from operations of $129 million, a massive leap from the $19 million in the prior year. Okta is well-positioned to amplify its business in the coming years.
IAM underpins zero trust security, a framework that enhances traditional perimeter-based security by treating every user as a potential threat and every sign-on attempt as a possible breach. Zero trust security provides superior protection and facilitates remote and hybrid work. With this in mind, Okta estimates its addressable market at $80 billion.
With shares currently trading at 5.6 times sales, a substantial discount to the three-year average of 23.7 times sales, this growth stock is worth acquiring immediately.
The impending bull market presents a promising opportunity for discerning investors to fortify their portfolios with exceptional growth stocks. Companies like HubSpot and Okta, known for their innovation and strong financial performance, offer promising investment prospects. These stocks present a compelling value proposition at their current prices. They are well-positioned to leverage market trends and consumer needs, thus paving the way for sustained growth and robust returns. It’s time to seize this opportunity and invest in these companies for the long haul.
