The Nasdaq Composite has been in fine form so far in 2023, with the index gaining nearly 10% thanks to signs of cooling inflation and resilient economic conditions that seem to have spurred investor confidence in stocks once again. What's more, history suggests that the stock market could have a nice 2023 following last year's huge disappointment. This is why now would be a good time for investors to buy some solid stocks before they get more expensive.
CrowdStrike (CRWD 3.51%) and The Trade Desk (TTD 4.36%) are two Nasdaq stocks that investors should consider buying right now as they can deliver healthy returns in the long run. Let's look at the reasons why.
1. CrowdStrike
CrowdStrike is a fast-growing cybersecurity company that provides endpoint protection, identity and data protection, and cloud security through a cloud-based platform. The rapid adoption of cloud-enabled services means that CrowdStrike operates in a fast-growing market that presents a secular growth opportunity.
Fortune Business Insights estimates that the cloud security market could clock annual growth of 18% through 2029, generating $106 billion in annual revenue at the end of the forecast period as compared to $29 billion in 2021. A closer look at CrowdStrike's growth suggests that the company is already making the most of this opportunity.
The company will release fiscal 2023 fourth-quarter results (for the three months ended Jan. 31) on March 7, and it is expected to finish the fiscal year with $2.2 billion in revenue. That would be a massive jump of 53% over fiscal 2022. Additionally, its earnings are expected to increase to $1.50 per share from $0.67 per share in fiscal 2022.
Analysts are upbeat about CrowdStrike's prospects for the next couple of years as well.
CRWD Revenue Estimates for Current Fiscal Year data by YCharts
We have already seen that the market in which CrowdStrike operates is set for healthy growth over the long haul, so it won't be surprising to see the company sustain its momentum for a much longer time. In fact, analysts anticipate the company's bottom line to clock a compound annual growth rate of 59% for the next five years.
The good part is that the growth in CrowdStrike's customer base and an increase in the adoption of its cybersecurity modules should help ensure healthy long-term growth. The company had just over 21,000 subscription customers in the third quarter of fiscal 2023, a big jump of 44% over the prior-year period. It is also worth noting that 60% of its subscription customers were using five or more of its modules, up from 55% in the year-ago quarter.
Moreover, CrowdStrike is the leader in the endpoint security market that's expected to exceed $24 billion in annual revenue by 2028. According to IDC, CrowdStrike controlled 17.7% of this space in June 2022, up from 13.8% in July 2021.
All this indicates that CrowdStrike could very well remain a top Nasdaq stock for years to come, which is why growth investors looking for a hot cybersecurity stock to add to their portfolios may want to buy it before it explodes in the long run.
2. The Trade Desk
Shares of The Trade Desk are on fire this year, gaining over 25% so far. The media-buying platform provider's fourth-quarter 2022 results that were released on Feb. 15 have played a huge role in this terrific rally.
The Trade Desk stock took off on the back of stronger-than-expected growth and healthy guidance for the current quarter. The adtech platform's revenue increased 32% for the full year to $1.58 billion, while non-GAAP earnings increased to $1.04 per share from $0.91 per share in 2021. The company also reported an impressive customer retention rate of over 95%, a feat that it has now achieved for nine quarters on the trot.
Even better, The Trade Desk's outlook suggests that it can deliver another solid year. The company anticipates $363 million in revenue this quarter, which would be a 15% increase over the prior-year period. According to consensus estimates, The Trade Desk could end 2023 with a 20% jump in revenue to $1.9 billion.
What's interesting is that The Trade Desk has been growing at a brisk pace despite the slowdown in the global digital advertisement industry. According to eMarketer's estimates, digital ad spending increased 8.6% in 2022, indicating that The Trade Desk grew at a faster pace than the market it is operating in. The company's 2023 growth estimates suggest that a similar story is expected to unfold this year.
A closer look at The Trade Desk's business model will tell us just why it has been outpacing the growth of the digital advertisement market. The company's cloud-based adtech platform allows media buyers to purchase, optimize, and manage ads based on their requirements so that customers can improve audience targeting and generate stronger returns on their ad investments.
The Trade Desk is simply a platform that enables customers to buy and run campaigns across different channels, which allows it to benefit from different trends within digital marketing. For instance, CEO Jeff Green pointed out on the latest earnings conference call that advertisers are shifting their spending from traditional television (TV) to connected TV, where there is premium streaming content.
As The Trade Desk's omnichannel platform allows customers to purchase and manage ads across multiple channels that include connected TV, online video, audio, and mobile, among others, it is well placed to take advantage of the rapid growth in any of these trends. For instance, spending on connected TV advertising in the U.S. alone is expected to jump to almost $39 billion by 2026 as compared to less than $19 billion last year.
What's more, the overall adtech market in which The Trade Desk plies its trade is expected to clock nearly 20% annual growth through 2028 and generate over $71 billion in revenue. So, The Trade Desk is only scratching the surface of a massive end-market opportunity that should ensure healthy growth for the company in the long run, making it another potential growth stock that investors may want to add to their portfolios.
