Brisk revenue growth is a compelling company feature, to say the least. An organization demonstrating its ability to generate growing demand is often a great indicator of future share price appreciation, which explains why so many investors are often willing to overlook a company's shortcomings if its top line is rising rapidly.
Let's consider two high-growth stocks and why both could have so much upside going forward.
1. CuriosityStream looks strong
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CuriosityStream (CURI 7.77%) is a factual, documentary-focused streaming platform designed to "satisfy humanity's enduring curiosity with premium content to inform, enchant & inspire." While this sounds nice in itself, its financials and projections are what I find to be most enchanting and inspiring.
This year, the company's subscriber base (excluding bundled subscriptions) is expected to grow 139% to roughly 1.52 million, with revenue projected to jump 119% to $39.5 million. Looking out further, the company expects strong demand to translate into $202.6 million in revenue by 2023, thanks to its non-bundled subscriptions rising to 5.96 million. Management also expects positive net income of $29.9 million for that year.
How will CuriosityStream meet these ambitious targets? It is rapidly scaling distribution in two ways beyond its direct subscriptions. First, it signs bundling deals with streaming platforms like Tata Sky Binge in India to deliver content to the new platform's 19 million consumers.
Additionally, it partners with corporations like universities to build co-branded, educational streaming libraries for them -- with multi-year contracts. CuriosityStream's Advisory Board features members from several esteemed universities, a sign that this strategy can work.
Company leadership also knows the company doesn't have the built-in brand awareness of a company like Disney, so it will be approaching scale and growth in several different ways.
Considering CuriosityStream's enterprise value of $655.9 million, if it can continue to realize its internal targets, the upside could be immense. And as of the company's most recent quarterly report, it's on track for revenue and subscribtions based on management's commentary. Still, though, we should consider that forecasts are never a certainty and can always fall short.
That's why the make-up of CuriosityStream's leadership is encouraging. The founder of the company -- John Hendricks -- founded Discovery decades ago. He led the cable network to years of success and growth. Now, with demand shifting from cable to streaming, he is leveraging his expertise in this category to build a successful streaming platform. For context, streaming is estimated to grow by more than 20% annually through 2027 versus just 3% for cable, according to Grand View Research. This opportunity is seemingly ripe for CuriosityStream and Hendricks to pursue.
2. Ozon is thriving in Russia
Ozon Holdings (OZON +0.00%) is a Russian e-commerce platform offering one of the broadest multi-category product selections in the region, according to INFOline.
Russia is among the least penetrated nations in terms of e-commerce usage with just 6% of its population shopping online in 2019. Interestingly, the low e-commerce penetration coincides with a relatively high internet penetration rate of 83%. This large gap offers evidence of a long growth runway for Russian e-commerce, and Ozon is positioned to capture it.
In June 2020, the company's online platform fetched 32% top-of-mind brand awareness versus just 18% for its next closest competitor. Perhaps unsurprisingly then, in the first nine months of 2020, its gross merchandise value (GMV) grew 142% year over year, while GMV for Russian e-commerce as a whole grew only 41%, according to the company.
Impressively, revenue for Ozon jumped 70% to roughly 66.6 billion rubles ($890 million), while operating margin improved from negative 31.7% to negative 17.7%. The company is not profitable, but it is enjoying an explosion in demand while it works toward profitability. To complement the strong expansion in 2020, Ozon's Net Promoter Score (NPS) improved from 67 to 79 in the third quarter. This strong gain offers evidence of high (and improving) levels of consumer satisfaction.
It's important to note that COVID-19 could be temporarily boosting Russia's online shopping industry. Still, the untapped nature of the market and Ozon's rapid ascension both make me hopeful that growth will continue for the company. Estimated 30% annual growth for domestic Russian e-commerce through 2025 offers strong evidence the company is targeting a promising market.
More recently, the company has expanded into new product offerings to bolster its value proposition. "Ozon.Card" is the company's branded debit card, offering users benefits if they shop with Ozon. Activated cards from Sept. 2019 to Sept. 2020 surged from 10,000 to 260,000 with these users also ordering from Ozon 1.6 times more frequently than non-card holders. It has an established travel booking service as well, which should benefit as the pandemic subsides.
Successful product launches like this are evidence that management can effectively venture into more and more businesses, similar to leading e-commerce players in other regions like Amazon and MercadoLibre.
Both are strong investments
CuriosityStream and Ozon are delivering and forecasting strong growth in their respective fields. For both, favorable industry dynamics and strong execution hint at two organizations capable of powering more shareholder returns going forward.
Based on all of this, the two companies are in my portfolio, and I think you should consider adding a small piece of both as well.
