With the obvious uncertainty permeating the landscape, it's easy to see why people would want to hang on to most of their hard-earned money.
Unemployment is still near historic highs, and a second round of stimulus checks has been stuck in political limbo. There are even some who believe a perfect storm is brewing that makes a second market crash this year almost inevitable.
Yet even in the face of this uncertainty, investors with a sufficient time horizon can still invest small sums consistently at regular intervals to generate wealth over the long term, particularly if they choose successful companies with a large and growing addressable market. More importantly, you don't need the resources of Warren Buffett or Jeff Bezos in order to prosper.
If you have as little as $500 (or less) in disposable cash that you don't need for immediate expenses or to beef up your emergency fund, buying shares in these companies with incredible growth prospects would be sheer genius.
The Trade Desk: Disrupting digital advertising
Cord cutting accelerated to record levels last year, as the largest pay-TV providers shed more than 4.9 million customers, marking the largest single-year decline in cable TV history, according to a report by Leichtman Research Group.
The trend has accelerated, as evidenced by losses of 2.87 million in 2018 and 1.49 million in 2017. Advertisers are being forced to reach these consumers in other venues, and that's where The Trade Desk (NASDAQ:TTD) comes in.
The company is a leader in programmatic advertising, a small but quickly growing segment of digital advertising. The Trade Desk developed a cutting-edge platform that can process 9 million ad impressions and quadrillions of permutations each second to ensure the ad is viewed by its target market.
The Trade Desk's channel-agnostic approach is evident in its fastest growing channels last year. Audio revenue grew 185% year over year in 2019, while connected TV climbed 137%. Mobile in-app and mobile video also shined, jumping 67% and 50%, respectively.
The pandemic has crimped marketing budgets this year, denting The Trade Desk's results, but the company still generated revenue gains for the first half of 2020. Advertisers are looking for more bang for their buck and many are giving The Trade Desk a whirl for the first time. Given the company's ability to target the right consumers, these new advertisers will likely stick around, especially considering the company's 95% customer retention rate, which has held steady for the past five years.
The Trade Desk had revenue of $661 million last year, a drop in the bucket compared to the $29 billion spent on programmatic advertising market in 2019. That illustrates just how far this innovator has yet to grow.
PayPal: The early stages of the digital payments revolution
PayPal (NASDAQ:PYPL) reemerged as a public company in July 2015 after its highly publicized split from eBay. Since then, the stock has been on fire, more than quadrupling in value in just five short years. However, digital payments are just getting started, giving PayPal much more room to grow.
While the pandemic was seen as a threat to some businesses, it was a boon to digital and touch-free payments, an area that falls squarely in PayPal's wheelhouse. Not only that, but PayPal's Venmo is frequently cited among the most popular peer-to-peer (P2P) payment apps. The P2P digital payment app is attracting a whole new demographic, a favorite among millennials for its ability to send money to friends and split restaurant tabs and other bills.
PayPal is expanding its addressable market in other ways, with the recent acquisition of Honey and its majority stake in Chinese digital payments guru GoPay. The company also entered into a strategic partnership with MercadoLibre, giving it access to a large market in Latin America.
As financial technology (fintech) continues to evolve, PayPal estimates the market for digital payments could eventually top $100 trillion. While that may sound like a pie-in-the-sky estimate, PayPal only needs to capture a small percentage of those transactions to be wildly successful.
During the trailing 12-month period, PayPal's total payment volume grew 24% to $791 billion, or less than 1% of the company's addressable market, which shows that PayPal has a long and potentially lucrative road ahead.
Amazon: E-commerce (and cloud computing) will only get bigger from here
Sometimes a look back helps us see into the future. In early 2010, digital sales represented just 4.1% of total retail sales in the U.S., but had quadrupled over the previous decade. Fast forward to the first quarter of 2020, and that percentage had jumped to 11.5% of total retail. When the pandemic struck, the adoption of e-commerce shifted into overdrive, soaring to $201 billion, up 37% quarter over quarter, and representing 15.1% of total retail.
Arguably no other company is better positioned to benefit from the rise in online sales than Amazon (NASDAQ:AMZN), the undisputed leader in digital retail. Amazon currently controls 44% of the U.S. e-commerce market, according to estimates compiled by Bank of America, but that could be just the beginning.
Amazon continues to expand around the globe, but international retail represented just 25% of its total sales so far in 2020, giving the company the entire world as its oyster.
Cloud computing also represents another tantalizing opportunity for Amazon. The company was a pioneer in infrastructure-as-a-service (IaaS), an area it still dominates. Amazon Web Services maintained a 45% market share in 2019, generating an estimated $20 billion, according to research company Gartner.
Cloud computing is growing like wildfire, however, and is expected to top $200 billion by 2027. If Amazon maintains the majority of its market share, revenue from AWS could growth more than four-fold in the coming years.
With not one, but two areas of utter domination, Amazon should be a cornerstone of any growth-focused portfolio.