Rising economic uncertainty and rising interest rates are the bad secrets to growing inventory.
Growth investors have been significantly affected by the current stock market sale driven by U.S. trade policy and subsequent reactions from other countries. Many companies face meaningful headwinds due to the effects of ongoing turmoil. However, long-term investors know that finding a strong business under market coercion is a great way to build wealth.
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COUPANG(NYSE: CPNG) Take it away Amazon script and apply it to Korea. Its ultra-fast shipping, supported by more than 100 fulfillment centers across the country, ensures that more than 99% of Coupang orders arrive within 24 hours of purchase.
The fulfillment network attracts customers to their WOW membership, which offers free shipping without a minimum order and food (consider) Uber Eats) and Coupang’s video streaming services. In turn, the growing WOW membership attracts third-party merchants and restaurants to Coupang’s platform, driving high-profit revenue growth for its market operations.
Coupang has several growth momentums. It expanded to Taiwan in 2022 and has strong momentum. It recently launched WOW membership in the market and hopes to break even faster than South Korea. Last year, it also acquired Farfetch, helping it expand into luxury goods. The company can also expand to digital advertising, which proves the high-margin growth drivers of other e-commerce companies, most notably Amazon.
Overall, management expects steady growth in revenue while expanding its EBITDA margins. Its long-term target is more than 10% profit margins, up from 4.5% in 2024. It can increase its supply chain efficiency, gain operational leverage, while expanding its business in Taiwan and its Eats delivery service space. This should bring strong revenue growth to investors.
Since corporate value stock trading will have the EBITDA ratio much less than 23, the price is much lower than its historical average. In the long run, with room for profit growth, patient investors should rush to buy stocks here.
When marketers want to run digital advertising campaigns, they may look for Facebook or Google, but these companies have a significant downside. They just provide a channel for advertising. For marketers who want to run a wide range of campaigns, ad performance across multiple channels such as streaming videos, podcasts or publisher’s websites will be prioritized. Trade station(NASDAQ: TTD) Provide first-class solutions.
The Trade Desk platform uses machine learning algorithms to optimize advertising campaigns for customers. It combines advertisers’ own data with third-party audience data that can be collected and analyzes its own historical data to provide its algorithms. This data advantage cannot be ignored and provides a huge competitive advantage for the trade station. As a result, the company can charge advertisers for premiums because it can help them get more from their budget.
Management reported very disappointing earnings results for February, which led to a massive sell-off in the stock. The introduction of tariffs will exacerbate this sell-off, which could be a headwind for the advertising market this year. CFO Laura Schenkein pointed out that its revenue shortage in the fourth quarter was not due to competitive pressure or lack of opportunities. This cannot be performed. Going forward, the company plans to grow by leaning towards opportunities and increasing operating expenses.
In the short term, this may give the trade station a trade-off, but in the long run, it has plenty of room to expand profit margins. This is a software business with relatively low fixed costs. Its gross margin is in the 80% range, which should make the company increasingly profitable with scale.
Despite the sell-off, the shares of the Trade Station are still trading at high valuations. Investors can buy stocks at an expected sales of 8.6 for corporate value. But this can be said that for a fair price for a company that should be able to expand its market share in a rapidly growing market, its profit margin significantly expands its profit margin in the long run.
As businesses add more software to their operations, they find that their data is distributed in different silos, making it difficult to determine their exact problem. Datadog(NASDAQ: DDOG) Get all the data, index it, and present it to customers in the unified dashboard, making it easy to see what is happening in their system.
The data observability market is growing rapidly as businesses want to add more services, migrate to cloud computing platforms, and seek to collect data from as much artificial intelligence (AI) services as possible. This provides Datadog with a long-term growth runway, but the company successfully implemented the land and expansion approach of its business, thus providing an additional boost to its highest line. The company expanded from observability to cloud security and cloud service management, and added modules to improve software delivery and analyzing customer data.
This led to a high net income retention rate in the 110s. And, 50% of customers now use four or more products, up from 42% two years ago. Another 12% used eight or more, up from 6% two years ago.
The company benefits from a large switching cost and is only strengthened when it sells to customers to other services. Switching observability providers will require significant overhead costs to reintegrate each data silo with the new provider and potentially lose valuable data in the process. There is an additional cost to re-cultivate users to new providers.
Meanwhile, DataDog further consolidates its position in the enterprise by making it easier for non-technical personnel to use its BITS AI CHATBOT to interact with data.
Currently, the stock is trading at about 10 times analysts expect corporate value for 2025 revenue. This is not the cheapest stock, but its growth potential is still strong. Analysts see sales volumes about 20% per year in the coming years. At the same time, it benefits from the high operating leverage of the software business, so revenue growth may increase significantly in the long run.
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John Mackey, former CEO of Amazon’s subsidiary Whole Foods Market, is a member of the board of directors of Motley Fool. Adam Levy holds a position on Amazon. Motley Fool has a location and recommends Amazon, Datadog, The Trade Desk and Uber Technologies. Motley Fool recommends Coupang. Motley Fool has a disclosure policy.
Stock Market Sell: Buy 3 Unwise Growth Stocks Now Originally published by Motley Fool
