More than ever, consumers are shopping online, connecting through social media, and engaging with mobile applications. As a result, businesses around the world are racing to build out their digital presence, spending trillions of dollars in the process. In fact, the International Data Corp. estimates that global spending on digital transformation will total $6.5 trillion between 2022 and 2024. That creates a significant opportunity for investors.

Building on that idea, companies like Adobe Systems (NASDAQ:ADBE) and DigitalOcean (NYSE:DOCN) are well-positioned to benefit as enterprises adopt digital solutions. Both stocks look like smart buys right now. Here's why.

Businesswoman analyzing various charts and graphs on her computer.

Image source: Getty Images.

1. Adobe Systems

Adobe specializes in creativity and customer experience. Specifically, the company offers three different software-as-a-service (SaaS) platforms, each of which plays an important role in enabling digital transformation.

Adobe Creative Cloud comprises a range of industry-leading software like Photoshop and Premiere Pro, and Adobe Document Cloud offers PDF and e-signature solutions. Adobe enables businesses to move from costly paper-based processes to digital documents. Likewise, Adobe Experience Cloud includes tools for analytics, marketing, and commerce. In all cases, Adobe leans on artificial intelligence to automate repetitive tasks and surface predictive insights, making work more efficient for its clients.

More importantly, these software products form a comprehensive solution, helping businesses create compelling content and provide engaging experiences for each customer, across any device. That value proposition has translated into impressive top-line growth, especially for a company founded nearly 40 years ago.

Metric

Q3 2020 (TTM)

Q3 2021 (TTM)

Change

Revenue

$12.4 billion

$15.1 billion

21%

Source: YCharts . TTM = trailing 12 months.

Of course, Adobe's brand name has become synonymous with creativity, but the company is also a powerhouse in other areas. For instance, research company Gartner recently recognized Adobe as a leader in marketing automation and digital commerce solutions, two industries that are growing quickly. The company's stock has followed that quick growth with a 44% increase year to date, with even more opportunities to come.

To that end, management puts its market opportunity at $147 billion by 2023, and given the company's strong competitive position, shareholders should see steady gains in the years ahead. That's why this growth stock looks like a smart long-term investment.

2. DigitalOcean

Cloud computing has transformed the IT world. Instead of buying costly and complex hardware, companies can provide resources through the internet. Legacy vendors like Microsoft and Alphabet's Google offer a wide range of products, but their offers are typically tailored to the needs of large enterprises. This means the implementation process is often too complex for small- and medium-sized businesses (SMBs) and individual developers.

DigitalOcean simplifies cloud computing. Its platform includes infrastructure services like computing and storage, as well as platform services like application development tools. But each of those products is tailored to the needs of SMBs and developers. Specifically, DigitalOcean built its platform with a click-and-go user interface, allowing clients to deploy solutions in minutes, without any specialized training. The company also provides 24/7 technical support and customer service, and predictable consumption-based pricing models. In fact, DigitalOcean typically outperforms its rivals on price.

That advantage has translated into strong demand. DigitalOcean had approximately 598,000 customers at the end of the third quarter, up 7% from the prior year. And its retention rate improved to 116%, indicating that the average customer spent 16% more over that time period. Not surprisingly, the company's top line is growing quickly.

Metric

Q3 2020 (TTM)

Q3 2021 (TTM)

Change

Revenue

$300.2 million

$396.4 million

32%

Source: DigitalOcean SEC Filings. TTM = trailing 12 months.

Notably, DigitalOcean's revenue has accelerated for the past four consecutive quarters, and average revenue per customer is trending upward at a steady clip. The company is well-positioned to maintain that momentum. According to management, there are approximately 100 million SMBs today, with 14 million new businesses starting each year. And the number of developers is expected to reach 45 million by 2030. 

In other words, DigitalOcean has captured less than 1% of its total addressable market. But given the company's focus on simplicity and customer support, shareholders should expect that figure to rise in the years ahead. Although the company is not yet profitable as it currently reports a net loss, the consecutive revenue growth and strong net retention could form a strong pathway to profitability soon. That's why this growth stock looks like a good investment.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.