Investors who aim to bet the broader indexes such as the S&P 500 need to create a portfolio of growth stocks. Generally, growth stocks have the ability to increase revenue and earnings at a faster pace allowing them to generate outsized returns over the long term. Here, we look at five such companies that can crush the S&P 500 over the upcoming decade.
A company valued at a market cap of $36.36 billion, Okta is trying to revolutionize the enterprise-facing identity management platform business. Similar to The Trade Desk, Okta is also part of a rapidly expanding addressable market that is valued at $80 billion in 2021, up from just $18 billion in 2017.
In the first quarter of fiscal 2022 that ended in April, Okta increased sales by 37% year over year to $251 million. Comparatively, analysts forecast sales at $238.3 million. The company’s net retention rate stood at 120% which suggests existing customers spent an additional 20% on average for Okta’s suite of security solutions.
Another key driver of revenue growth was the expansion of its customer base that now stands at 10,650, up 27% year over year. In Q1, Okta reported a net loss of $0.10 per share which was wider than its prior-year loss of $0.06 per share. The company attributed its net loss expansion to the $6.5 billion acquisition of Auth0 which specializes in customer identity management.
Despite its widening losses, Okta’s free cash flow stood at $53 million, accounting for 21% of sales. Now, Okta has forecast sales to grow at an annual rate of 35% through 2026 to touch $4 billion in revenue, while maintaining a free cash flow margin of 20%.