Veteran investors are no doubt familiar with the popular acronym FAANG, which represents some of the most successful and wealth-generating companies of the past decade.
- Facebook, which changed its name to Meta Platforms
- Apple
- Amazon
- Netflix
- Google, which rebranded as Alphabet
What fueled the success of these companies was their innovative approach to their businesses, changing the face of social media, smartphones, digital retail, streaming video, and online search, respectively. As a result, investors who put their hard-earned money into these stocks have earned robust returns of between 427% and 1,160% over the past decade.
Data by YCharts.
Like many technology companies, the FAANG stocks were brutally punished during the downturn but have recently come roaring back, gaining 42% on average over the past year. Investors might be surprised to learn that stocks making up the GHOST acronym (which I conjured up last year) have outperformed their FAANG counterparts, rising 46% on average.
While that may not seem like much, over the longer term, a few percentage points can add up. Here's a look at all five GHOST stocks.
Image source: Getty Images.
Global-e Online: Up 85% in the past year
Digital retail is ubiquitous, and the next phase of growth will result from connecting buyers and sellers across borders. And that's where Global-e Online (GLBE 2.44%) comes in.
The company specializes in reducing the complexity inherent in international e-commerce, handling the challenges of customs and duties, market-adjusted pricing, taxes, native languages, local shipping and returns, cross-border regulatory compliance, and local payment methods. These issues are all addressed in a single platform, making international sales a snap, ultimately increasing any business' market opportunity.
Shopify has long recognized the value of Global-e's tools and services, making it the exclusive provider of cross-border assistance for users of its software-as-a-service (SaaS) platform. Shopify also owns more than 20 million shares of Global-e Online stock, amounting to a 12.8% stake worth more than $859 million. That's a massive vote of confidence from one of the world's leading e-commerce platforms.
Global-e's recent results illustrate the ongoing rebound in online retail. In the first quarter, revenue grew 54% year over year, while profits jumped 63%. This was fueled by gross merchandise volume that surged 55% year over year.
Given the indispensable services it provides for those expanding into international digital retail, Global-e Online will help fuel the next leg of e-commerce growth.
HubSpot: Up 89%
From its roots in inbound marketing, HubSpot (HUBS -0.78%) has undergone a stunning transformation, expanding into every corner of customer relationship management (CRM). The company now offers a growing ecosystem to better engage with customers, offering marketing, sales, service, content management, and payment tools.
HubSpot maintains that keeping your existing customers happy is equally as important as attracting new ones, and the company provides the tools that make that ambition a reality. A quick look at HubSpot's results proves that its strategy is working.
For the first quarter, even facing macroeconomic headwinds, HubSpot's total revenue grew 27% year over year in constant currency. While the company isn't yet profitable on the basis of generally accepted accounting principles (GAAP), HubSpot generated strong operating and free cash flow of $81 million and $85 million, respectively, which shows its lack of profits resulted from noncash items, including depreciation. This further suggests that ongoing profitability is merely a matter of time.
Fueling its financial results is strong customer growth: 23% year over year. And 45% of HubSpot's annual recurring revenue (ARR) came from customers subscribing to three or more "hubs."
Furthermore, its customer count grew 25% year over year, with more than 60% of customers adopting multiple products. HubSpot made a repeat appearance last year as a Leader on Gartner's Magic Quadrant for marketing automation platforms.
Strong customer relationship management is a key to long-term success, and HubSpot's next-generation tools continue to gain market share.
Okta: Down 28%
It only takes a glance at recent headlines to understand the importance of controlling access to workplace systems to keep the wolves from the door, which is where Okta (OKTA -0.69%) comes in.
The company's cloud-native platform acts as a gateway, providing independent identity verification and access management tools. The portal and secure gateway for customers, employees, and contractors works by using a zero-trust model. This ensures that only people and organizations with prior authorization can gain access to business applications and systems. This prevents intrusions, hacks, and data breaches that are seemingly an everyday occurrence.
A high-profile attack on its system last year has left investors with a crisis of confidence, and Okta's financial performance shows that the struggle continues. For the fiscal 2024 first quarter (ended April 30), revenue grew by 25% year over year, while its remaining performance obligations (RPO) -- which includes unbilled contractually obligated revenue -- rose 9%.
Since RPO is a forward-looking metric, it suggests its future business is slowing, which management has acknowledged. But it could be set for a rebound, with the company forecasting RPO to increase 18% for the year.
Despite its challenges, Okta has been cited as the leading performer in access management by both Gartner and Forrester Research, making it a compelling choice to prevent unauthorized access to secure business systems.
Snowflake: Up 21%
The term "digital transformation" has been bandied about with increasing frequency to describe the accelerating migration of applications, data, and systems to the cloud. This tidal wave is ongoing, but there are headwinds. Assembling data in a single place allows for better analysis, but that's not always practical.
Snowflake (SNOW 3.69%) offers an elegant and robust solution. It provides the tools necessary to gather, store, and analyze information, which results in meaningful insights from the data parsed.
In its fiscal 2024 first quarter (ended April 30), revenue grew 50% year over year, while RPO climbed 31%. The company isn't yet profitable but generates strong operating and free cash flow, so it's just a matter of time before its profits are here to stay.
Even amid headwinds, Snowflake's impressive customer growth continues. Its client count grew 29%, but its most lucrative customers -- those spending $1 million or more over the preceding 12 months -- increased 80%. Furthermore, existing customers tend to spend more money over time, as evidenced by the company's net revenue retention rate of 151%.
Knowledge is power, and given its ability to provide valuable and actionable insights, Snowflake will continue to ride the secular tailwinds caused by digital transformation.
The Trade Desk: Up 80%
As the advertising landscape evolves, marketers are no longer content with the hit-and-miss approach that has characterized their business for years. The use of high-speed computers, sophisticated algorithms, and specialized data allows for more-accurate targeting than ever before, even as ad-tracking cookies go the way of the dinosaur, and the drumbeat for consumer privacy grows louder.
The Trade Desk (TTD 1.67%) has the answer. The company developed Unified ID 2.0, which has become the de facto replacement for cookies, while simultaneously protecting personally identifiable information. And its latest platform innovations allow advertisers to incorporate their own first-party customer data into ad campaigns to better reach their target market.
The downturn punished digital advertising stocks, and The Trade Desk wasn't spared, but the company continued to steal market share from its larger rivals. Revenue grew 21% year over year in the first quarter, while its adjusted net income increased 10%. Perhaps most telling, the company generated record free cash flow.
As a leader in the programmatic advertising space, The Trade Desk is well-positioned to ride the rally higher.
