2021 was one of the biggest years in history for initial public offerings (IPOs) and special purpose acquisition companies (SPACs). Over 1,000 companies went public in 2021, so plenty of high-quality stocks got sidelined in favor of other new issues.
While there were many companies that shouldn't be overlooked, two of them stand out to me. Both SEMrush (SEMR +0.08%) and Global-E Online (GLBE 0.85%) debuted last year, and they are set to see strong returns over the next decade as investors recognize their potential.
Image source: Getty Images.
1. SEMrush
Getting the attention of a consumer can be difficult for marketers, considering how people have gotten used to mentally blocking out ads. As a result, businesses need the help of platforms like SEMrush to help them find effective ways to reach their target audience. And according to software review site G2, SEMrush happens to be one of the leaders in this space.
The company's success in the marketing technology industry comes down to its best-in-class product. SEMrush has 50 tools on its platform, creating an all-in-one service where marketing teams can go to experiment with dozens of different strategies. This comprehensive product suite creates a sticky platform that can retain customers long term.
NYSE: SEMR
Key Data Points
SEMrush's top line grew 50% last year to $188 million, and its year-end customer count jumped 22% year over year to 82,000. What's especially impressive about SEMrush is its cash flows. It generated $20 million in free cash flow last year, up 700%. With the bottom line near breakeven and no debt, the company can pour its cash into growth investments, extending its lead in the industry. Management estimates it has a global opportunity of $16 billion today, which is expected to grow over time.
At a market capitalization of just $1.5 billion, this small company can easily be overlooked by investors, despite its strong positioning. The stock trades at 7.5 times sales, near the lowest level since the company went public and a reasonable price for an industry leader expected to grow revenue another 30% this year.
2. Global-E Online
Global-E is another small company, worth just $4 billion as of this writing. Shares have fallen 70% from their all-time high. However, the business is still executing well, which is why the company could be a steal at these prices.
Global-E is helping the e-commerce world become more global by easing the barriers to international expansion for small and medium-sized businesses (SMBs). SMBs can struggle with accepting international payments, shipping overseas, different languages, and even complying with foreign regulations and taxes. All of these barriers make it difficult for smaller businesses to expand internationally, but Global-E can step in and help them compete with bigger companies.
NASDAQ: GLBE
Key Data Points
The company has seen impressive adoption: It had nearly $1.5 billion in gross merchandise volume run through its platform in 2021, up 87% for the year. That number could be boosted by U.S. businesses looking to expand abroard. Right now, Global-E makes most of its money from European customers, but last year, revenue from U.S. businesses jumped 108%.
Global-E saw just 2% customer churn in 2021, and customers spent an average of 52% more in 2021 than they did the year prior.
It's clear the company's product has become mission-critical to many e-commerce businesses. That said, the volatility the stock has seen lately could continue, so dollar-cost averaging into this high-growth company is one way to offset the choppy trading. However, there is no denying Global-E has a high-quality offering and huge market opportunity, making it a stock investors should own for the long term.
