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3 Unstoppable Tech Stocks to Buy With Your $1,400 Stimulus Check

By Chris Neiger, Danny Vena, and Brian Withers - Mar 20, 2021 at 8:00AM

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Technology stocks are a great place to put that stimulus money to work.

The third round of stimulus checks is already being mailed out or deposited into many American's accounts. Many individuals will receive $1,400 and that influx of cash will likely leave some investors wondering where's the best place to put that money to work. 

To help you make that decision, we asked a few Motley Fool contributors for tech stock ideas that could end up being a great place to invest stimulus checks. They came back with Okta (OKTA 6.37%), CrowdStrike Holdings (CRWD 4.17%), and Shopify (SHOP 10.94%). Here's why. 

A stack of $100 bills.

Image source: Getty Images.

Partnering up with an identity management leader

Brian Withers (Okta): Okta has built an $835 million annual revenue business on its identity management platform. As businesses move to the cloud, keeping the bad actors out of their network is more important than ever. But you don't want to make logging in so complicated that it frustrates employees and business partners. Okta brings together strong identity management services with the ease of a single sign-on for authorized users, and customers love it.

Metric

Q4 FY2020

Q3 FY2021

Q4 FY2021

Change (QOQ)

Change (YOY)

Revenue

$167 million

$217 million

$235 million

8%

41%

$100K-plus annual contract value customers

1,467

1,780

1,950

10%

33%

Remaining performance obligations

$1,210 million

$1,582 million

$1,797 million

14%

49%

Data source: Okta. Note: Q4 FY2021 ended on Jan. 31, 2021. QOQ = quarter over quarter. YOY = year over year.

Recent results from the fourth quarter of fiscal year 2021 show that the company is executing at a high level. Top-line growth of 41% year over year and quarter-over-quarter growth of 8% shows that the coronavirus pandemic isn't slowing this business down. Its large customers with annual contract values (ACV) greater than $100,000 are growing at a fast clip as well, reaching 33% year over year. Lastly, the business pipeline looks strong with its remaining performance obligations (RPO) growing 49% year over year -- faster than the current portion of its RPO, meaning that customers are signing longer contracts.

But the company isn't just resting on past success. Earlier this month, the identity management leader announced a deal to acquire Auth0, a developer-friendly identity management platform, for an all-stock deal valued at $6.5 billion. The $200 million in Auth0's annual recurring revenue will be immediately accretive to Okta's top-line growth. The customers, products, and geographies are complementary between the two companies and will provide more opportunities to build on Okta's collection of $100,000-ACV customers. This acquisition should strengthen the combined company's overall value proposition for customers and allow it to build an even better suite of products.

If you're up to date on your bills, you might consider putting a portion of your stimulus check toward this growing tech stock. I'm pretty sure your future self will thank you for doing it. 

A woman holding a tablet standing in a server room.

Image source: Getty Images.

Fly like a Falcon

Danny Vena (CrowdStrike): The recent SolarWinds fiasco and other high-profile hacks in recent years should make it abundantly clear that the need for cybersecurity is greater now than ever before. As these hacks and intrusions become increasingly more sophisticated, it's also clear that no one is immune from these attacks. That's where CrowdStrike Holdings comes in.

The company has taken an innovative approach to cybersecurity by protecting the endpoints -- focusing on servers, desktops, laptops, and mobile devices. Its cloud-based platform uses artificial intelligence (AI) to combat both known and evolving threats. These sophisticated algorithms hoard data, actually getting smarter as time goes on. By analyzing the legions of previous attacks and attempted intrusions, its software is able to identify patterns, putting it out in front of the next hack.

Additionally, CrowdStrike's Falcon platform uses next-generation antivirus technology that combines AI, behavioral detection, machine learning, and exploit mitigation to anticipate and prevent potential threats. The company also employs a complex version of "crowdsourcing," aggregating data from its customer base to help improve its responses. This combination of threat intelligence and vulnerability detection is winning converts at a rapid pace.

For fiscal 2021 (ended Jan. 31, 2021) CrowdStrike reported revenue that grew 82% year over year, driven by subscription revenue that grew 84%. Each new subscriber was more lucrative, as subscription gross margin climbed to 77%, up from 74% in the prior year. CrowdStrike reached an important milestone last quarter, as annual recurring revenue (ARR) surpassed $1 billion. The company continued to lose money, but its net loss of $93 million improved from a loss of $142 million, as CrowdStrike edges ever closer to profitability. 

Its cash flow continues to climb, which should help allay any fears about its bottom-line performance, as much of the company's losses are related to non-cash items like depreciation. Cash from operations grew 257% in fiscal 2021, while free cash flow grew more than 22-fold.

CrowdStrike's customer metrics are equally impressive. The company added 4,465 new subscription customers last year, up 82% year over year, bringing the total to 9,896. That's not all. Existing customers are adding even more services, as those adopting four, five, or six modules increased 63%, 47%, and 24% respectively.

It's important to note that CrowdStrike isn't cheap, selling at 33 times forward sales. However, given its meteoric growth rates and the increasing potential for explosive profits just ahead, this digital guardian seems nigh unstoppable.

A woman using a computer.

Image source: Getty Images.

A rising e-commerce star with a lot more sparkle left 

Chris Neiger (Shopify): Shopify's e-commerce platform helps businesses of all sizes set up online shops to sell their goods and services. The company was integral to helping many businesses stay afloat over the past year as they shifted online during the pandemic. 

Shopify experienced extraordinary growth in 2020 and in the fourth quarter (reported on Feb. 17) the company's sales soared 94% and adjusted earnings spiked 267%. The impressive quarter was fueled by both of the company's revenue segments, with subscription sales jumping 53% and merchant solutions popping 117%. 

Despite a very strong quarter, the company's stock has been flat year to date and is down from its recent highs. Why the slide? Some investors think that as the U.S. economy begins to open back up it will slow the pace of high-growth tech stocks. 

Admittedly, it's not likely that Shopify's stock will rise another 185% as it did in 2020, but I think it's likely that the tech stock will easily outpace the S&P 500's returns. That's because Shopify isn't finished tapping into the fast-growing e-commerce market

Consider that at the end of 2020 online sales accounted for just 16% of all retail sales in the U.S. That still leaves a lot of room for Shopify to expand its platform as more businesses shift to online sales in the coming years. 

In short, e-commerce is still in its early stages, Shopify is in a leading position, and the company's stock is currently down from its recent highs. When you combine all these factors together, it makes Shopify look like a fantastic place to put your $1,400 stimulus check.

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Stocks Mentioned

Shopify Inc. Stock Quote
Shopify Inc.
SHOP
$400.07 (10.94%) $39.45
Okta Stock Quote
Okta
OKTA
$83.79 (6.37%) $5.02
CrowdStrike Holdings, Inc. Stock Quote
CrowdStrike Holdings, Inc.
CRWD
$144.27 (4.17%) $5.77

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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