Stocks That Could Set You Up For Life: Some investments have become the stuff of legend. Everyone wishes they had gotten in on the ground floor for Apple, Microsoft, and Amazon, which have grown approximately 125,000 percent, 69,860 percent, and 120,000 percent since their respective IPOs.
There is still money to be made by investing in all three. They continue to grow rapidly, and they were the first US companies to exceed $1 trillion market caps.
In fact, Apple recently hit the $2 trillion mark. However, most investors are looking for the next big win – a company they can still get into early, then ride all the way up. These are three new ideas for stocks that could set you up for life.
Okta Protects Against Hackers
Identity management is a major concern in the current digital environment. Companies in every industry handle highly-sensitive personal data, from medical information to financial details. A breach of any size is devastating, both from a cost perspective and a customer relations perspective – and the problem is growing every day.
According to a University of Maryland study, hackers launch an attack every 39 seconds – a total of 2,244 times per day.
The average impact of successful breaches is approximately 25,575 records, and the per-record cost of each breach is $242 in the United States.
One of the most highly publicized, an attack against Equifax in 2017, exposed 147.9 million consumers’ records and cost the company more than $4 billion.
There are dozens of factors that go into keeping data safe, but the problem is that businesses must find balance between security and convenience.
Employees and consumers are quickly frustrated when presented with an excessive number of passwords and challenge questions before they can access their accounts.
Finding the right mix to create a seamless identity authentication and management experience is a top priority, and Okta is on the cutting edge of that technology.
The Future For Okta Stock Is Bright
Okta started its business in the workforce identity management space, but it’s now dipping into customer identity management. This area promises significant growth in coming years, which places Okta in the right place at the right time to generate substantial shareholder value.
Best of all, Okta’s revenue hasn’t been impacted by the COVID-19 pandemic, which adds a bit of security against the risk of market volatility until the pandemic officially ends.
When Okta reported its second quarter 2020 earnings, analysts were pleasantly surprised. The company exceeded expectations by growing revenues to $200.4 million – a year-over-year increase of 43 percent.
Adjusted earnings per share came in at $0.07, which marks a vast improvement over second quarter 2019’s loss of $0.05 per share.
The total addressable market for workforce identity management is in the range of $25-$30 billion, which means there is theoretically room for revenues to grow massively their current level. Customer identity management has an estimated total addressable market of $25 billion, which is a full 100 times larger than Okta’s current revenues in that market.
With those figures in mind, management estimates compound annual growth between 30 percent and 35 percent through early 2024. That could mean revenues of between $1.67 billion and $1.95 billion making Okta a definite buy.
US Foods Supplies 300,000+ Restaurants
The food industry is one that investors can count on. After all, no matter how tight budgets get, food still takes a priority position. US Foods, parent to popular brands like Chef’s Line, Metro Deli, and Stock Yards, is a massive distribution company that supplies more than 300,000 restaurants and foodservice operators.
The good news for such companies is that production costs are low, and most clients won’t switch to competitors due to the cost of making such a change. Over time, US Foods has developed an end to end distribution network that newcomers can’t match in a cost-effective manner.
The bad news is that US Foods is facing unprecedented challenges. For example, COVID-19 temporarily shuttered many restaurants. Most have or will reopen in the near future, but as a whole, the industry has not yet recovered.
A second concern is that major competitors like Amazon and Walmart are entering the food distribution space. Yes, it will cost them quite a bit to build out networks that can rival US Foods, but they have a head start given their existing businesses.
More importantly, they have money to invest in such a venture. Finally, there is a trend towards local food sourcing that may or may not have an eventual impact on nationwide food distributors.
With that said, US Foods had an excellent second quarter, exceeding analysts’ expectations by an impressive margin.
The company reported a loss per share of $0.25, which was $0.10 better than projected, and revenues came in at $4.56 billion. That’s quite an accomplishment, given the predicted $4.23 billion.
For investors, the question is whether US Foods is a smart buy, both short-term and long-term. Given its industry leadership position, its tight, forward-thinking strategic plan, and the current relative discount, most experts say yes.
Olin = Ammo… And That’s Big Business
Olin might not be a household name, but everyone knows its subsidiary – Winchester. After all, Winchester firearms are something of an American icon, with more than 150 years of history behind them.
Olin has three primary businesses – ammunition, epoxy resins, and chlor alkali products. All are critical components of other goods and services manufactured and distributed worldwide.
Olin employs more than 6,500 people across its three divisions, and it has clients in almost 100 countries. It has an unmatched distribution and logistics network, and it is a leader in each of its respective industries. In other words, when it comes to ammunition, epoxy, and chlor alkali products, there is no real competition, despite global demand.
With that said, the pandemic has put a crimp in two of Olin’s three businesses. Pauses in manufacturing and production around the world reduced the need for epoxy and chlor alkali products.
Overall, second quarter sales for the two went down by approximately 27 percent year-over-year.
However, pandemics end eventually, and when this one does, Olin will be first in line to supply clients with the materials needed to resume their own production. Given those circumstances, many analysts believe that Olin could be a smart buy.
The bottom line is that there are some stocks available to you today that will eventually be the next trillion-dollar businesses.
The key is to do careful research into financials, future demand, and strategy to determine which are most likely to succeed. When you choose well, you may find yourself with stocks that could set you up for life in your portfolio.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.