Two Tech Companies Exhibiting Exponential Growth, Wise Choices for Investment in 2024 and Future Periods
Two Tech Companies Exhibiting Exponential Growth, Wise Choices for Investment in 2024 and Future Periods
I'm more of a growth-oriented investor at heart. While value investing can generate substantial wealth, a substantial chunk of my portfolio is dedicated to long-term wealth builders that offer stability – diversity is crucial, right? But let's be real, finding tomorrow's heavy hitters today is exhilarating.
I've had some success stories under my belt, but they took several years to develop. My investments in Netflix (NFLX -0.72%) and Alphabet (GOOG -1.16%) (GOOGL -1.11%) have seen returns of over 1,000% each. I started these investments in 2011 and 2010, respectively.
I'm always on the lookout for the next Netflix or Alphabet. Can I invest today to collect substantial returns in the next decade or two?
My current picks include media-streaming technology expert Roku (ROKU 1.33%) and restaurant management software maker Toast (TOST -3.74%). These growth stories are still in their early stages, and I think they've got a lot of winning years ahead of them.
Here's why I'm bullish on Toast and Roku's future growth:
Impressive growth trajectories and future potential
Toast and Roku might have different business models, but they share some common ground.
Toast's simplified restaurant management system is installed in 127,000 locations worldwide, accounting for just 14.5% of the U.S. restaurant market. On the other hand, Roku has reached 85.5 million media-streaming households and generated $3.6 billion in annual platform revenues (service fees and ad sales). With the domestic TV advertising market projected to be worth over $90 billion this year, the growth potential is immense.
Both companies also have significant expansion opportunities abroad once they exhaust their domestic growth potential.
In the last five years, Roku's sales quadrupled. Toast has seen a fourfold increase in three years. Both companies have reported solid quarterly profits, paid off their long-term debt balances, and boosted their cash reserves beyond the $1 billion mark.
Market reactions and buying advice
Toast has witnessed investor enthusiasm, with its stock price rising by 120% this year. The stock isn't cheap, trading at 50 times forward earnings estimates and 4.9 times trailing sales, but I believe it's worth every penny.
In contrast, Roku's valuation continues to be undervalued. Despite losing 21% of its value in 2024, Roku's shares are valued at just 2.5 times sales. And when viewed in another perspective, Roku's stock price is 85% lower than its peak.
How to invest in Toast and Roku today
If you're on the fence about Toast, I'd recommend considering Roku first. But don't seize this opportunity too long. You don't want to spend the next decade or so looking back on missed opportunities and lamenting the market-beating gains from 2030 or 2035.
You can divide your investments into multiple transactions over time or even automate a dollar-cost averaging plan for the long haul. These strategies can dampen market volatility and avoid buying at uncomfortable prices.
Whatever investment method you choose, give Roku and Toast another glance. I can't guarantee their growth will match my Netflix and Alphabet returns, but the opportunity is too good to pass up. I think we're looking at tomorrow's giants in their fledgling phases.
Roku is gaining market share from traditional TV networks and other online media channels, while Toast's presence in my takeout receipts keeps growing. Both companies have clear growth strategies, and I see long-term value in their stocks today.
Investing in growing companies like Roku and Toast aligns with my finance strategy, focusing on long-term wealth builders. I believe their impressive growth trajectories and future potential make them worth considering for substantial returns in the coming decades.
Managing my finance involves diversifying my portfolio and actively seeking opportunities, such as investing in Roku and Toast, which offer promising future growth.