The stock market sell-off during September and October appears to have subsided, with the S&P 500 index now back to its all-time highs. The dip was just 5% at its worst, so some investors might be feeling that it wasn't much of a buying opportunity.
But it's important to stay focused on the long term, and remember that time in the market is more important than timing the market. Investors who buy stocks today probably won't be dwelling on their entry prices when the year 2030 rolls around.
Here are two innovative technology stocks that could grow fivefold by then, and they can be bought right now.
Image source: Getty Images.
1. The case for DocuSign
DocuSign (DOCU 1.67%) is best known as the leader in digital signature technology. It was having plenty of success prior to the pandemic, but when work-from-home trends kicked in, the company's growth rate exploded. This new dynamic appears to be sticking around, and DocuSign's expanding product portfolio stands to yield long-term rewards.
The company is investing in emerging technologies like artificial intelligence to deliver the next generation of digital-document innovation. The DocuSign Insight platform can read and analyze legal contracts to identify problematic clauses or potential opportunities, saving companies time and money.
It's especially helpful for organizations that issue and receive a high volume of contracts because the cost of retaining a team of lawyers can be astronomical. While Insight isn't ready to replace these professionals just yet, artificial intelligence promises a future that almost makes it inevitable.
|
Metric |
Fiscal 2019 |
Fiscal 2022 (Estimate) |
CAGR |
|---|---|---|---|
|
Revenue |
$701.0 million |
$2.1 billion |
43.8% |
Data source: DocuSign. CAGR = compound annual growth rate.
Assuming DocuSign's price-to-sales ratio remains the same, it would need to grow revenue by about 20% per year for its stock to rise fivefold by 2030. Right now, its revenue is growing at double that pace. But perhaps more significantly, the company is expected to reverse its history of losses by generating $1.75 in earnings per share in the current fiscal year, which ends Jan. 31, 2022.
Among the Wall Street analysts that cover DocuSign, none of them recommend selling the stock. With a strong vote of confidence from the professionals, a future grounded in innovative technology, and the numbers to back it up, DocuSign looks like a great bet to turn $50,000 into $250,000 by 2030.
Image source: Getty Images.
2. The case for Redfin
Unlike DocuSign, Redfin (RDFN +0.00%) isn't trying to reinvent the wheel. It operates in the real estate sales industry, and it's taking existing processes and simply trying to make them better (and cheaper) -- and it's having enormous success.
Most real estate agents are either independent or work within a small firm that's dedicated to a specific city or geographic area. They charge listing fees of around 2.5%, which are costly for the seller, but selling a house is a huge financial decision that most people aren't willing to attempt without professional help.
Redfin is disrupting the traditional model by employing thousands of agents who operate in every major jurisdiction across the U.S. By building such scale, the company is able to charge listing fees of just 1%, and it has already saved consumers over $1 billion since its inception. The proposition is a win for Redfin and home-sellers alike, driving soaring revenue growth as a result.
|
Metric |
2018 |
2021 (Estimate) |
CAGR |
|---|---|---|---|
|
Revenue |
$486.9 million |
$1.8 billion |
54% |
|
Redfin Share of U.S. Home Sales |
0.81% |
1.18% (Current) |
N/A |
Data sources: Redfin, Yahoo! Finance.
Redfin's market share of total homes sold continues to climb, further highlighting the company's popularity among consumers. But the company isn't a one-dimensional sales agency; it also has a small presence in the technology-driven iBuying business, where it purchases homes directly from sellers and flips them for a profit.
The company sold 463 homes using this method in the first half of 2021, representing 39% growth compared to the first half of 2020. While strong, almost all of Redfin's gross profit still comes from selling homes the traditional way.
Like DocuSign, Redfin is crushing the 20% revenue growth rate it needs to potentially rise fivefold by 2030. It operates in a $36 trillion industry and as it continues to snatch market share, it's an exciting opportunity for investors.
