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Investing legend Peter Lynch once said that the time frame for looking for companies in the second or third round of their life and exiting in the seventh round could span decades.
He pointed out Walmart In the year It was a 25-year-old company when it went public in 1970, and ten years later it had grown tenfold. Lynch regretted missing out on the opportunity, which saw the retail giant grow another 50-fold.
Here are two stocks that look to be hot for more growth and could be homerun opportunities for your portfolio in 2023 and beyond.
Image source: Getty Images
Free market
Free market (Melly 2.03%) It is the largest e-commerce platform in Latin America and has seen significant growth in recent years. Revenue grew to $7.1 billion in 2021 from $2.3 billion in 2019, and surpassed the $7.5 billion revenue in the first nine months of 2022. The number of unique active users has grown from 74.2 million to about 140 million.
One reason for this growth is the penetration of internet and mobile devices in the region, which has led to an increase in online shopping. Another reason is that Latin America’s e-commerce market size is expected to reach $379 billion last year and will grow at a compound annual rate of 25% by 2025. Largest market share.
It has also expanded into new verticals, such as its fintech arm Mercado Pago, an online payment platform that allows users to shop on MercadoLibre and other e-commerce sites using a variety of payment methods, including credit and debit cards, banking. Transfers, and money. Mercado Libre has become the fastest growing business.
Despite the huge growth seen in the past, the reason there is still such a large runway for future growth is that e-commerce is still such an underserved market in Latin America. For example, although e-commerce will grow by 37% by 2020, Brazil, the largest economy in the region, will increase from 7.5% to 12.5%, which means there is still an untapped market here.
Look for MercardoLibre to have several decades of development before you get anywhere near the seventh-inning stretch.
Image source: Getty Images
Zscaler
Zscaler (ZS -0.41%) It is a cloud-based cyber security company that has seen significant growth in recent years due to the increasing demand for safe and secure internet connectivity. The main reasons for this demand are the shift to remote work and the proliferation of Internet-connected devices, which has made cyber security solutions more desirable. They are no longer a luxury for business, but a necessity.
That’s reflected in Zscaler’s growth, growing 2.5 times its own revenue from $431 million in 2020 to $1.1 billion in 2022. It’s still making a loss, and that’s because of generous stock-based compensation, which last year totaled $430 million. year. If there is a negative criticism of this company, I would say it is there. However, Zscaler still generates free cash flow (which does not include SBC in the calculation) of $244 million.
The markets, however, are no longer yielding high-growth, high-multiple loss-making businesses, and companies are finding that they are making stock options. Still, Zscaler’s otherwise strong financials indicate the company should eventually generate a profit. It ended its fiscal first quarter with more than 340 clients with $1 million or more in annual revenue — a 55 percent increase from last year.
While Zscaler says it’s “extending” or stretching out its sales cycle, that’s only because it’s closing larger deals, so the company needs more time to research and review the terms.
The Identity Theft Resource Center reports that the number of data breaches will increase by 68 percent by 2021, while Gartner estimates that global cybersecurity spending will grow to $262 billion by 2026. Overall, Zescaler appears to have strong growth potential as the need and demand for cybersecurity increases. Solutions.
Rich Duprey has no position in the mentioned stocks. He has a spot in the Motley Fool and recommends Mercado Libre, Walmart, and Zcaller. The Motley Fool has a disclosure policy.
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