In less than 72 hours, we'll be ringing in a New Year. It's a time for hope and reflection -- as well as piling into the hottest growth trends that could define the upcoming year.
In 2021, the coronavirus pandemic and retail investors' love for short squeezes seemed to dominate the newswires. But as we look to 2022, a number of other fast-paced, high-interest trends are likely to work their way to the forefront. Below are four high-growth trends you'll want to be invested in for 2022.
While there are plenty of double-digit growth trends investors can put their money to work in right now, none is arguably safer than cybersecurity. That's because no matter how well or poorly the U.S. economy is performing, hackers and robots don't take a day off. As businesses shift their data into the cloud in the wake of the pandemic, third-party cybersecurity solution providers will be increasingly leaned on to protect that information.
The plain-as-day stock to own in this space is CrowdStrike Holdings (CRWD 0.75%). CrowdStrike's cloud-native Falcon platform relies on artificial intelligence and is overseeing approximately 1 trillion events on a daily basis. Since it's built in the cloud, Falcon is nimbler and more effective at detecting and responding to potential threats than on-premises security solutions.
What's particularly impressive is the subscriber ramp-up for the company. Less than five years ago, CrowdStrike had 450 clients. But as of the end of the most recent quarter, it had nearly 14,700 subscribers. What's more, 68% of these clients had purchased four or more cloud-module subscriptions, up from a high single-digit percentage less than five years ago. Since cybersecurity subscriptions deliver exceptionally high margins, and CrowdStrike's customers are constantly adding onto their existing solutions, the company has already hit its long-term subscription gross margin target of 77% to 82%+.
Although 2021 started off with a bang for U.S. marijuana stocks, the industry has been an utter buzzkill for the past 10 months. President Joe Biden and the Democrat-led Congress have failed to pass cannabis reforms at the federal level, which has clearly bummed out Wall Street and investors.
But there's absolutely no reason to sulk. We've witnessed 36 states legalize weed in some capacity, and the Department of Justice plans to allow individual states to regulate their own industries. While legalization would clear up some operating inefficiencies, the pot industry can still grow by a double-digit annualized percentage through at least mid-decade without any federal reforms.
Take Green Thumb Industries (GTBIF -0.56%) as the perfect example of a pot stock that can excel, even with cannabis remaining an illicit drug at the federal level. Green Thumb is a multi-state operator (MSO) with 68 operating dispensaries in 14 U.S. markets. It's leaned on high-dollar markets, as well as limited-license states, to grow its brands and garner a loyal following. Operating in states that cap how many dispensary licenses they'll issue ensures Green Thumb a fair shot at gobbling up market share.
Another secret to success with Green Thumb is its revenue distribution. A majority of its sales come from higher-margin cannabis derivatives, such as oils and edibles, which are less sensitive to oversupply and pricing pressure.
Edge cloud computing
Another big trend in the latter half of 2021 that's been garnering a ton of buzz is the metaverse -- the next iteration of the internet that'll allow people to interact in a 3D virtual environment. We're in the very early stages of metaverse development. But one thing that'll be absolutely imperative to its success will be reducing latency (making sure there's minimal or no lag when users take action within these virtual environments). That's where edge cloud service providers come into play.
Edge computing is a distributed framework whose sole purpose is to bring enterprise applications and data closer to local/originating servers. Edge computing providers aim to reduce latency and ensure that content reaches end users as quickly and securely as possible. According to ReportLinker, the edge cloud-computing market is expected to grow by an annualized average of 19% between 2021 and 2026.
The most intriguing company to own in edge computing is Fastly (FSLY 0.85%). Although the company did endure a service issue in June, it's continued to build on its enterprise customer base. While significant investments and bigger headcount are weighing on the company's bottom line, it's hard to ignore adjusted gross margin that consistently comes in between 52% and 62%.
Furthermore, Fastly's dollar-based net expansion rate and average spend for enterprise customers have been trending higher. Even as many Americans got back to some semblance of normal in 2021, demand for Fastly's services continues to grow.
The fourth high-growth trend begging to be bought in 2022 is anything having to do with data storage.
Prior to the pandemic, we were witnessing a pretty steady shift of enterprise and consumer data into the cloud. But since the pandemic completely disrupted the traditional workplace, there are more transactions, projects, collaboration, and innovation than ever occurring online and in the cloud. Based on a report from Grand View Research, the next-generation storage market is expected to average 12.5% annualized growth between 2019 and 2025.
Examples of companies that could benefit immensely from big-data needs are Western Digital (WDC 5.75%) and Micron Technology (MU 7.19%). Western Digital has already received a boost from the gaming industry, which needs improved memory options every time new consoles come out. But it's Western Digital's data center hardware that could be its long-term growth driver. Within a few years, the company's NAND flash solutions have become a mainstay in enterprise data centers.
Meanwhile, Micron Technology has benefited from the stay-at-home movement -- more computers and in-home electronics are being sold -- and is seeing big gains from next-gen smartphone sales and the memory-demand needs of electric vehicles. The supply chain issues associated with the pandemic, coupled with years of consolidation in the memory space, have all but ensured that oversupply and weak pricing won't get the better of Micron or its peers in 2022.