It's a great time to invest in the stock market. Whether you're new to investing or have years of picking stocks under your belt, finding those market gems that can fuel amazing returns for years to come doesn't always come easy.
Let's investigate three very different companies that have not only marked tremendous gains in the pandemic era but boast diverse growth stories that can fuel amazing investor returns for many years down the road.
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1. Innovative Industrial Properties
The marijuana industry is no stranger to volatility, and it's widely known that companies in this sector tend to struggle with profitability. But today's marijuana industry has produced a selection of highly compelling stock market gems, and Innovative Industrial Properties (IIPR 1.47%) certainly makes the cut.
The real estate investment trust (REIT) owns a portfolio of properties around the country that it only leases to state-licensed medical-use cannabis growers. Innovative Industrial Properties' focus on the legalized and regulated side of the cannabis industry has enabled it to benefit from the notable tailwinds this sector has to offer while avoiding the headwinds that traditional retailers and growers typically face.
In 2020, Innovative Industrial Properties reported that its total revenue surged 162% and adjusted funds from operations increased 180%. Its bottom line also jumped 191% compared to 2019. Innovative Industrial Properties is faithfully growing its national footprint. The company spent $620 million on expanding its stable of properties in 2020, and in the months of March and April 2021 it acquired new properties in Texas and Michigan.
Innovative Industrial Properties is also a great stock for investors seeking dividends. It pays a dividend that yields 2.6%, and the company regularly increases its payout. In fact, when the company declared its first-quarter dividend in March, it raised its payout 6% from the previous quarter and 32% from the year-ago quarter. If you're an investor interested in the cannabis space and want a stock that delivers that ideal combination of long-term growth potential and dividend income, Innovative Industrial Properties is a clear winner on all fronts.
2. Etsy
Etsy (ETSY 7.02%) is another superior growth play to add to your list of stock buys with wealth-building potential. The e-commerce website saw waves of new buyers and sellers flock to its platform during the pandemic, and is also primed for future exponential growth as the global consumer shift from brick-and-mortar retail to online shopping continues.
Last year, Etsy reported landmark revenue growth of 111% and its marketplace revenue surged by 120%. The company's gross merchandise sales also spiked by triple digits, to the tune of 107%. And unlike some fast-growing companies that struggle with profitability, Etsy is growing its bottom line at an even more impressive pace than its top-line gains. The company's 2020 net income represented a total increase of 264% compared to 2019.
And the considerable growth of the global e-commerce market drove 62% more active sellers and 77% more active buyers to Etsy's platform in 2020 than it had recorded the year prior. Etsy set impressive goal posts for its first-quarter 2021 performance, the results of which it will release on May 5. Management has targeted between 115% and 125% gross merchandise sales growth for the quarter, and revenue growth in the ballpark of 125% to 135%.
In many ways, Etsy's business model is highly differentiated from those of other e-commerce websites. Its platform is specifically geared toward specialty, one-of-a-kind, and customized goods, so many of the items bought and sold on Etsy can't be found anywhere else. With a broad and unique selection of products that includes everything from furniture to clothing to toys to musical instruments, Etsy's platform provides virtually limitless opportunities for both buyers and sellers around the world. This translates to equally limitless growth and profit potential for Etsy.
The global e-commerce market had already reached a $9.1 trillion valuation in 2019 and is expected to mark a 15% compound annual growth rate between 2020 and 2027. With plenty of market space left to explore, Etsy is a compelling long-term investment to help build a market-beating, high-growth portfolio.
3. Salesforce.com
Software-as-a-service (SaaS) giant salesforce.com (CRM 2.37%) is another shrewd stock buy to capitalize on the ongoing growth potential of the digital age we live in.
Salesforce built on its superior track record of balance sheet growth last year. The 12-month period ending Jan. 31 was actually its fiscal 2021. In this fiscal year, the company grew its total revenue by 24% to $21.3 billion. Salesforce's subscription and support revenue increased 25% from fiscal 2020, while its professional services and other revenue rose 21%.
The company also significantly grew its cash from operations in its fiscal 2021. In the fourth quarter alone, this metric increased 33% from the year-ago period, while its cash from operations for the full year rose by 11%. Salesforce is leveraging this spike in operating cash flow to boost its liquid assets. The company closed its fiscal 2021 with roughly $12 billion in cash, cash equivalents, and marketable securities on its balance sheet, whereas it has less than $3 billion in noncurrent liabilities.
Management is expecting another excellent year of strong growth in fiscal 2022. It forecasts that Salesforce will generate between $25.65 billion and $25.75 billion in revenue during the 12-month period.
Knowing this, it's no surprise that Salesforce is the market share leader in the global customer management relationship (CRM) industry. In fact, 2020 marked the seventh year in a row that the International Data Corporation recognized Salesforce as the No. 1 CRM provider in the entire world. The CRM market had a total global valuation of $40 billion in 2019, according to Grand View Research.
Salesforce's clear competitive advantage and tremendous growth potential will not only translate to continued balance sheet growth in the years ahead, but could also stimulate remarkable market share. And long-term shareholders are sure to reap the profits.
