Although The Trade Desk (NASDAQ: TTD) and Global-e Online (NASDAQ: GLBE) have both surged over 80% this year, these specialized market leaders still have significant growth potential. High-growth technology stocks can be risky investments; take, for instance, the so-called “pandemic stars” that have struggled to sustain their once-impressive sales growth.
However, both The Trade Desk and Global-e Online have demonstrated that their explosive growth is more than just a one-time event. Leading the way in their respective sectors, these companies are projected to maintain double-digit growth rates for years to come.
Investing incrementally in these stocks in 2023 could yield substantial long-term returns, despite their high valuations.
1. The Trade Desk
Projected to reach $1 trillion by 2024, the global advertising market is astoundingly large, offering a golden opportunity for The Trade Desk and its comprehensive demand-side platform. Although the company accounts for less than 1% of the global ad market, its revenue has been increasing at a 39% annual rate since 2018.
Furthermore, The Trade Desk has been capturing market share at an impressive rate, outstripping the global ad industry’s predicted 6% growth in 2023 by generating 23% growth in Q2.
Its strongest revenue channel, connected TV ad spending—which constitutes roughly 45% of its revenue—has seen particularly remarkable growth. This aligns well with projections indicating a 10% annual increase in connected TV ad spending until 2028.
Additionally, the company’s Unified ID 2.0 technology has gained momentum by being adopted by major platforms like Warner Bros. Discovery and Peacock. If Walmart, the largest retailer in the U.S., also adopts this technology, it could become the industry standard.
Despite trading at a high price-to-sales ratio of 25, its growth prospects make The Trade Desk an excellent candidate for incremental investments throughout 2023.
2. Global-e Online
Situated at the crossroads of international and direct-to-consumer sales, Global-e Online simplifies the process for businesses to sell products worldwide, providing a tailored shopping experience. Once integrated, a seller can offer localized options for language, currency, and more. Global-e also takes care of complicated logistical tasks, from taxation to delivery.
With a 53% sales increase in its most recent quarter, the company continues to gain traction. Moreover, its gross profit margin has been steadily improving, indicating increasing operational efficiency. This is particularly noteworthy given its recent acquisitions and partnerships, such as the soon-to-launch Markets Pro in collaboration with Shopify.
Despite its stock price soaring over 80% this year and a price-to-sales ratio of 12, the company’s strong profit margins and projected 49% sales growth for the upcoming year make it an attractive choice for long-term, incremental investments.
In a landscape where technology companies can quickly rise and fall, The Trade Desk and Global-e Online have shown that they are not just flashed in the pan. Their robust business models, advantageous market positions, and consistent growth make them compelling candidates for long-term investment. While their valuations may seem steep at first glance, their future growth potential justifies a closer look. For those who are willing to invest for the long haul, dollar-cost averaging into these stocks throughout 2023 could provide a lucrative payoff in the years to come.
