3 Top-Notch Growth Stocks I Just Bought

Following the market crash in February and March brought on by the coronavirus pandemic, stocks have rebounded sharply -- especially high-growth tech stocks. So, why consider buying those stocks now? From time to time, strong price action simply reflects underlying business execution and an improved outlook for the long-term growth story. I believe that's the case for these three stocks.

For CrowdStrike (CRWD 1.91%), Slack Technologies (WORK), and Twilio (TWLO 1.40%), shares still look attractive today -- even after their recent run-ups. Not only are their revenues and profit margins improving quickly, but the temporary lockdowns across the globe have accelerated the need for digital transformation in business, making cloud-first software-as-a-service (SaaS) stocks CrowdStrike, Slack, and Twilio more relevant than ever.

Here's a look at why I've been building positions in these three growth stocks.

Image source: Getty Images.

Torrid growth

The three stocks are part of a basket of companies I'm investing in as a move to grab a piece of the future. SaaS companies have become increasingly relevant, and even mission-critical, to many organizations as they are forced to transform digitally. All three of these companies' recent growth rates show how customers are adopting their solutions in droves.

Cloud-based cybersecurity specialist CrowdStrike's fiscal first-quarter revenue jumped 85% as increased adoption of its security modules helped drive an 89% jump in subscription revenue (subscription revenue notably accounts for more than 90% of total revenue). 

Slack, a provider of a channel-based messaging platform for helping teams collaborate, saw its revenue jump 50% year over year during the same period, fueled by increased spend from existing customers and a 49% jump in paid customers. 

Twilio, a provider of cloud-based communication tools and services for developers, is seeing similarly strong growth. Its first-quarter revenue jumped 57%, driven by a dollar-based net expansion rate of 143%. Excluding the impact from the company's recent acquisition of email marketing company SendGrid, this measure of increased spend from existing customers came in at 135% -- still impressively high.

Robust operating leverage

While none of these companies is profitable under generally accepted accounting principles (GAAP), each of their business models possesses meaningful operating leverage. A combination of high growth rates, fat gross profit margins, and operating leverage, therefore, should lead to substantial profits over the long haul.

In their most recent quarters, here's how each of these growth stocks' non-GAAP operating margins fared.

Data sources: CrowdStrike, Slack Technologies, and Twilio.

Of course, I had to pay a high premium to buy into these growth stories. CrowdStrike, Slack, and Twilio trade at price-to-sales ratios of about 37, 26, and 21, respectively. But I believe today's high price tags for these companies will look like great entry points when investors look in the rearview mirror 10 years from now.

In short, these cloud-native SaaS stocks are incredible growth stories and I want to own a piece of them over the next decade.