Investing is like trying to make the perfect batch of cookies: Start with a good recipe, try to keep the right ingredients ready, and be ready to spend some time on it. Stick to the recipe, dodge any unexpected challenges, and let the whole process run its course, and you'll end up with something sweet.
And if you don't have a good time in the kitchen, you can always pick up some macaroons or shortbread masterpieces from the bake sale at the park with the extra cash you earned from these great tech stocks -- I won't tell.
On that note, let's grab some annual statements and a stick of lightly salted butter. I know you're just here for the dough, but it's time to bake up some tech stock snickerdoodles.
The Trade Desk: Advertising in the age of algorithms
First, I'll give you a taste of The Trade Desk (TTD 1.36%), an adtech company that helps advertisers place their ads across various media channels. When this company does a good job, its clients get more business results from a lower marketing budget. Unsurprisingly, this idea is popular during a tough economy, like the inflation-based downturn we're living through right now.
What sets The Trade Desk apart is its self-service platform that uses algorithms to select the best location for an ad. Companies are expected to spend a whopping $348 billion on advertising in the U.S. alone in 2023, giving The Trade Desk a tremendous opportunity to benefit from this growing market. Its long-term growth strategy includes expanding its global presence, continuing to grow its connected-TV opportunity, and innovating and improving its technology offering.
Over 1,000 clients have spent more than $20,000 on this company's services. More than 95% of these customers renewed their arrangements in 2020, 2021, and 2022. That's some impressive customer loyalty -- is The Trade Desk handing out free cookies to committed clients?
Of course, I jest, but loyal customers' business value is real. While The Trade Desk's valuation might make some investors hesitate, with a lofty valuation of 58 times forward earnings, its impressive cash reserves and industry-defining market position make it a strong contender for investors with a long-term time horizon.
And as if The Trade Desk's self-service ad platform isn't enough to entice investors, the company's multifaceted growth strategy is exciting for the long haul.
The Trade Desk is expanding its global presence in some of the world's biggest economies, like China, India, and Indonesia. Plus, the company is a trailblazer in addressing the sector-wide technical challenges of online user tracking by developing a tool called Unified ID 2.0, already approved in the U.S. and currently going through approval processes in the European Union. This system lets The Trade Desk continue to sell privacy-respecting but targeted advertising without relying on third-party tracking cookies, which are slowly but surely being phased out by all major web browsers over the next year or so.
With these forward-looking strategies, The Trade Desk is set to keep dominating the adtech market for years to come.
The connected TV market is still in its early innings, and the full-on transition from billboards and untargeted cable TV ads to digital advertising has a long way to go. However, while the overall digital advertising market has slumped, The Trade Desk continues to bake up a storm, and its stock price has skyrocketed as a result.
With its innovative platform, impressive customer retention rates, and long-term growth strategy, The Trade Desk is a top software stock worth considering for the long haul.
MongoDB: This isn't your grandpa's database system
Next up is MongoDB (MDB -2.12%), a company that offers a multicloud database platform for developers. It's a leader among next-generation NoSQL databases.
Let me nerd out on NoSQL databases, just for a second. Unlike traditional SQL databases, where data is stored in precisely defined tables, NoSQL databases like MongoDB use a more flexible, document-based approach. This makes them better suited for managing modern, unstructured data types like social media posts, images, and sensor readings.
Many databases can be hosted in the cloud, but MongoDB's Atlas lets users choose exactly where the cloud database lives. It supports the leading cloud computing services, direct installation on the hardware in your data center, and any mix-and-match combination. It's like mixing chocolate chips and peanut butter -- it just works! This flexibility sets MongoDB apart from its competitors and gives it a real edge in the market.
MongoDB's next-generation database design is also a perfect fit for modern businesses dealing with lots of messy data inputs.
Thanks to its flexible technology and firmly established leadership in the $45 billion market for operational database systems, MongoDB has many opportunities to gain share in many key markets in the years to come.
The company has a large developer base and a uniquely flexible range of deployment options. Its long-term growth strategy includes expanding its Atlas platform, growing its partnership network, and expanding its offerings to support a wider range of data workloads. Like The Trade Desk, this company is doing strong business in spite of a weak economy.
A lofty valuation might worry some investors -- shares are changing hands at 147 times forward earnings and 12 times trailing sales. Even so, MongoDB's ongoing pivot to sustained profits, on top of a more-than-solid market position, make it an intriguing pick for long-term investors.
You can't go wrong with The Trade Desk and MongoDB
Investing is all about sticking to the recipe. You'll be rewarded with a sweet treat if you're patient and ready to improvise when the eggs are too cold or the butter's too soft. In this case, you're baking up a couple of tasty software stocks that can stand the test of time.
So whether you're interested in The Trade Desk's self-service marketing platform or MongoDB's multicloud database solutions, both of these software stocks should stay sweet for decades to come.
