Ever wondered how small companies grew larger and became well known to the general public? Many businesses started small but had a management team that could articulate clear strategies for long-term growth. Over time, these companies slowly but surely strengthened their competitive moats and built up an impressive track record of consistent increases in revenue and net income.

That's how we ended up with famous companies such as Apple and Nike. Both companies started as small businesses but grew larger over time due to savvy management and strong product portfolios. Since 1980 (when both Apple and Nike were listed), their shares have returned multiples of what stockholders paid for them back then.

MarketAxess (NASDAQ:MKTX) and DocuSign (NASDAQ:DOCU) are two companies that are reporting healthy growth and have clear catalysts that could make them the monster stocks that everyone wishes they owned.

Person signing on a tablet computer

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Nearly everyone is familiar with how stock investing works, as stock markets are a common feature of most developed countries. By contrast, there is no organized exchange for buying and selling bonds. This is where MarketAxess comes in. The company operates an electronic bonds trading network using its proprietary platform that allows clients to transact in bonds. MarketAxess has over 1,700 institutional investor and dealer firms on its platform. In 2019, the company had an estimated 19% and 10.4% share of trading volume in U.S. high-grade and high-yield bonds, respectively.

The company has been steadily growing its revenue and net income. Revenue increased from $302.2 million in 2015 to $511.4 million in 2019 as more bonds were onboarded onto MarketAxess's platform over time, creating a powerful network effect that attracted more clients. Net income rose faster than revenue, more than doubling from $96 million to $204.9 million over the same period. The business continued gaining traction this year as the pandemic accelerated businesses' shift to digital and online methods of transacting. For the first nine months of 2020, revenue surged by 35.7% year over year to $517.8 million, while net income climbed by 46.4% year over year to $226.4 million. The company has also increased its annual dividends from $0.80 per share in 2015 to $2.04 per share in 2019.

MarketAxess has done a fantastic job in garnering more active international clients over the years. The number of clients went from 293 in 2014 to 830 in 2019. This growth attests to the strengthening of the company's competitive moat over time, leading to higher top and bottom lines. The company believes it still has significant room to grow. The estimated average daily volume for all its addressable credit markets amounts to $67 billion, of which MarketAxess logged a daily average volume of just $9.8 billion in September.


As more and more businesses start to digitize their operations and processes, DocuSign is sitting in a very sweet spot right now. The electronic signature company provides the most comprehensive, cloud-based signature solution in the world, allowing a document to be signed electronically on a wide variety of devices and from almost anywhere around the globe. As agreements are an integral part of all organizations, DocuSign helps to solve the pain points associated with getting these agreements signed and digitized by providing its core product, the Agreement Cloud. This software helps to automate the entire agreement signing process, is encrypted for security, and also leaves an audit trail.

The company had around 749,000 customers as of the second quarter of its fiscal 2021. DocuSign is a software-as-a-service company that sells subscription packages to its clients, thereby assuring itself of its future revenue stream. Subscription revenue made up 95% of its total revenue, with an average contract length of around 14 months. Aside from merely providing electronic signatures, DocuSign is exploring multiple avenues to increase its use cases and broaden its revenue streams.

The company has had an impressive track record of rapid growth. For the fiscal year 2016 ended Jan. 31, 2016, total revenue stood at $250.5 million. Four years later, revenue had nearly quadrupled to $974 million. DocuSign has continued spending significant amounts of money on sales and marketing to obtain more customers, which is why it is still losing money. However, as the pandemic pushes more and more companies to adopt online agreements, DocuSign's services should be more highly sought after than ever before.

These two stocks have strong tailwinds working in their favor and should continue growing for many years. Over time, they may turn out to be titans within their respective industries. Shareholders will be rewarded handsomely for their patience.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.