It might seem tough to find high-growth stocks in an aging bull market. However, there are still attractive stocks in the cloud, online travel, and business services industries. Today, three of our Motley Fool contributors will share their favorite high-growth plays in those markets: Veeva Systems (VEEV), Booking Holdings (BKNG 1.72%), and Cintas (CTAS 0.56%).
A healthcare cloud leader
Leo Sun (Veeva Systems): Veeva Systems provides cloud services for the healthcare industry. The Veeva Vault helps companies track industry regulations, clinical trials, and prescribing habits. The Veeva Commercial Cloud is a CRM (customer relationship management) platform that helps pharmaceutical companies manage their customer relationships.
Veeva enjoys a first-mover's advantage in this niche section of the cloud market, and it serves over 600 customers -- including GlaxoSmithKline, Novartis, and AstraZeneca. Veeva's growth is boosted by the competition between these companies, which all need access to real-time industry data.
Veeva doesn't face much meaningful competition in this market, and it has strong ties to Salesforce, the world's top provider of enterprise CRM solutions. Its founder and CEO, Peter Gassner, was previously Salesforce's SVP of Technology, Veeva's CRM platform is powered by Salesforce1, and Veeva's services are integrated into Salesforce's Marketing and Service Clouds.
Veeva's revenue rose 23% to $185 million last year, as its non-GAAP EPS grew 27%. Analysts expect its revenue and earnings to rise 23% and 59%, respectively, this year. Unlike many other high-growth cloud companies, Veeva is also consistently profitable on a GAAP basis.
Veeva's stock looks pricey at nearly 60 times forward earnings, but that premium is justified by its market-leading position and strong growth. The healthcare cloud-computing market could still grow from $20.2 billion in 2017 to $35 billion by 2022, according to Research and Markets. This stock still has plenty of room to run.
Want strong growth? You can book it
Dan Caplinger (Booking Holdings): One of the greatest high-growth stocks of all time is Booking Holdings, with its extensive network of online travel websites. The company previously known as Priceline Group made a huge splash when it purchased Booking.com back in 2005, and the strategy behind the deal turned out to be sheer genius. To a greater extent than its rivals, Booking identified the need to go beyond the U.S. to offer the widest possible scope of international travel deals, and the first-mover advantage it captured still keeps competitors at bay.
Some investors have been nervous about the slowing growth that Booking Holdings has seen recently. For instance, in its most recent quarterly report, the online travel giant said that revenue grew 17% on a 15% rise in gross bookings, but key metrics like the growth rate in the number of hotel room-nights booked on the site slowed to just 12%. That might sound like a lot, but for those who are used to seeing the 20%-plus figures the company routinely posted just a year ago, it's cause for concern. However, one thing Booking Holdings almost always does is underestimate in its guidance how well it will do in the future. With so many things going for it, Booking Holdings has the capacity to keep growing even as it commands its industry.
An unlikely candidate
John Bromels (Cintas): When you picture a high-growth company, you probably think of an up-and-coming Silicon Valley tech start-up. What you probably don't think about is a nearly 100-year-old business services company in the Midwest that's already a member of the Fortune 500. And yet, uniform renter Cintas, based in Cincinnati, Ohio, and founded during the Great Depression, has grown shareholders' investments faster than Tesla or Facebook over the last five years.
Cintas' savvy management team has pursued all of the usual avenues for growth: It has boosted organic revenue by taking market share from smaller competitors in the fragmented North American uniform rental market. It's gobbled up some of those competitors, too, like its recent acquisition of rival G&K Services. And it's used its flexible core business model of delivery truck routes to offer other services besides uniform rental, including floor mat rental, restroom restocking, first aid kit restocking, and fire and safety equipment services.
However, even though Cintas' share price has grown more than 300% over the last five years, the company still has room to grow. Cintas is the largest player in the market, but that market is still very fragmented, giving Cintas numerous opportunities to take market share from -- or just acquire outright -- smaller competitors. Meanwhile, demand for Cintas' non-core services like fire and safety have been growing faster than its core uniform rental business's organic growth, offering valuable additional revenue streams.
With unemployment low, businesses have more need than ever for all of Cintas' services. This unlikely growth stock should continue to soar.