When I'm looking for investment ideas, one of the first things I consider is a company's top-line performance. Specifically, I like to see strong revenue growth supported by a large market opportunity. That dynamic indicates two things: The company could be successful, and it's actually executing on that potential.

Enterprises like Fastly (FSLY 1.58%), Lemonade (LMND 3.21%), and Zillow Group (Z -0.16%) (ZG 0.05%) meet those criteria right now. Here's why I think all three are good long-term investments.

1. Fastly: Tapping into the edge computing trend

Fastly's edge cloud platform offers similar benefits to traditional cloud computing: Clients spend less on hardware and data centers, and they can scale their businesses more quickly. But edge computing offers other benefits, too -- like improved performance and reliability.

Individual holding tablet that shows upward growth trajectory.

Image source: Getty Images.

In simplest terms, clients store content on Fastly's powerful servers, which are positioned at the network edge (i.e., in close proximity to internet exchange points). Ultimately, this allows Fastly to accelerate content delivery, creating a better experience for end-users like you and me. Websites can be personalized in real-time, applications are more responsive, and streaming media loads more quickly.

Compared to its competition, Fastly's edge cloud is faster and offers more advanced features. This means it's well suited for enterprise clients that need to differentiate their products. For instance, Shopify relies on Fastly to ensure that millions of merchant websites load quickly, providing a high-quality shopping experience for consumers.

In recent years, Fastly has benefited from strong demand as more enterprises have focused on digital transformation. That has powered strong top-line growth.

Metric

2017

2020

CAGR

Revenue

$104.9 million

$290.9 million

40%

Data source: Fastly SEC filings. CAGR: compound annual growth rate.

According to management, Fastly's market opportunity will reach $36.2 billion by 2022. But that figure should continue to grow in the years ahead, as more enterprises move resources to the edge in an effort to better serve their customers. That leaves plenty of upside for Fastly and investors.

2. Lemonade: Benefitting from AI-powered insurance

Lemonade is a tech company that's disrupting the insurance industry. By using behavioral economics and artificial intelligence, Lemonade hopes to build a more efficient business than legacy insurance providers.

On the front end, it uses AI chatbots to help consumers purchase policies and file claims. This reduces the company's dependence on insurance agents, cutting payroll costs. More importantly, its digital platform also enables it to collect more data than traditional insurers.

On the back end, Lemonade uses that data to power AI algorithms that underwrite policies and detect fraud. Over time, this should allow Lemonade to quantify risk more precisely than its rivals, which should drive lower prices for consumers.

Tying that together, Lemonade operates with fewer employees per customer, measures risk more effectively, and often charges less -- that's a pretty good value proposition.

Those efficiencies have powered strong growth for this young tech company. However, it's worth noting that, due to Lemonade's recently restructured reinsurance strategy, it's more helpful to consider gross profit than revenue for year-over-year comparisons.

Metric

2018

2020

CAGR

Gross profit

$3.1 million

$24.8 million

183%

Data source: Lemonade SEC filings.

And Lemonade is just getting started. Global insurance premiums total over $5 trillion each year, and Lemonade has introduced several new products in recent months, dramatically increasing its market opportunity. For instance, just a few days ago, the company announced its plans to launch Lemonade Car auto insurance within the year.

3. Zillow Group: Leading the way in digital-first real estate

Zillow is a tech company looking to disrupt the real estate industry. Originally, Zillow operated a media business, generating revenue through the sale of marketing tools and services. However, the company started restructuring in 2018, with the goal of providing an end-to-end real estate solution.

Zillow Homes For Sale sign along sidewalk.

Image source: Zillow Group.

Today, Zillow buys and resells homes directly through Zillow Offers. It also provides title and escrow services through Zillow Closing Services and financing through Zillow Home Loans. This robust portfolio reduces friction for consumers, simplifying one of the biggest purchases of their lives. Consider this scenario: Zillow can now purchase a customer's home, help them find a new home online, and then connect with a local partner agent to assist with the buying process. Then, it can provide financing and closing services to simplify the transaction.

Notably, Zillow's media properties give the company a big advantage over its rivals. First, the Zillow website and mobile app received 9.6 billion views last year, making Zillow the most popular real estate site in the United States -- that means it's easy for the company to acquire customers. Second, Zillow's media business is profitable, allowing the company to invest aggressively in home buying. Third, Zillow's media properties have attracted a large partner network of real estate agents, landlords, and construction firms -- this enhances Zillow's value to consumers.

These advantages have translated into strong revenue growth over the last three years.

Metric

2017

2020

CAGR

Revenue

$1.1 billion

$3.3 billion

46%

Data source: Zillow SEC filings.

Zillow estimates its market opportunity at $2 trillion -- the sum of all real estate transactions in the United States. That gives this tech company plenty of room to grow as it continues to expand into new housing markets.