During the past century, the stock market has recovered from every economic downturn and gone on to climb to new highs. This time is unlikely to be different. Stocks have already recouped much of their losses from the bear market, and multiple signs suggest a new bull run is taking hold.
To help you claim your share of the potential profits to come, here are three companies that are particularly well situated to ride the market's next rally to new heights.
Redfin
Higher mortgage rates have damped home sales. But with inflation moderating, the Federal Reserve may be nearing the end of its efforts to slow price increases with interest rate hikes. Signs of a housing recovery, in turn, are emerging.
A strengthening housing market should be a boon for Redfin (RDFN +0.00%) and its shareholders. The real estate services provider is built to make money as homes are bought and sold.
NASDAQ: RDFN
Key Data Points
Redfin operates the most popular brokerage website, with almost five times the traffic of its nearest rival. This brings a lot of homebuyers and sellers to its platform. Redfin converts many of these website visitors into customers with its low listing fees. By charging sellers 1% of the sale price compared to the typical agent commission of 2.5%, Redfin can help its clients save thousands of dollars in closing costs.
These cost-savings have fueled Redfin's market share gains in recent years. Yet real estate is a huge industry, with the U.S. brokerage market alone valued at more than $120 billion. So despite its impressive pace of expansion, Redfin accounts for less than 1% of its core U.S. existing home sale market. The company clearly has a long runway for growth still ahead.
Investors should note that Redfin is not yet profitable. But after shedding its home-flipping operations and implementing other cost-cutting initiatives, Redfin is now a leaner and more focused enterprise. Chief Executive Officer Glenn Kelman expects the company to break even on an adjusted basis in 2023, and profits could come even sooner if the current housing market recovery accelerates.
SoFi Technologies
Banking is going digital. SoFi Technologies (SOFI +3.33%) is built to profit from this megatrend. The online personal finance upstart is poised to deliver wealth-building gains to its investors as it claims a larger share of the trillion-dollar U.S. commercial banking industry.
NASDAQ: SOFI
Key Data Points
With annual percentage yields of 4.5%, SoFi's online bank accounts are proving popular with consumers. SoFi added over 584,000 new members in the second quarter. That contributed to a 44% year-over-year increase in its total member count to 6.2 million.
These customer gains are fueling a sharp rise in SoFi's deposit base, thereby providing a valuable source of low-cost funds for its loan business. In all, the digital bank's total deposits grew by 26% to $12.7 billion, while its total loan origination volume jumped 37% to $4.4 billion.
SoFi's Q2 revenue rose 37% to $498 million. These gains, combined with the company's efficiency initiatives, drove a 278% surge in its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to $77 million.
Better still, management expects SoFi to achieve sustained profitability based on generally accepted accounting principles (GAAP) by the fourth quarter. Buy the shares now, and you can set yourself up to profit alongside this fintech leader.
The Trade Desk
People are ditching their cable bundles and switching to streaming alternatives in ever-increasing numbers. Marketers are adapting to this trend by shifting their advertising spending to online content -- and they're increasingly turning to The Trade Desk (TTD 6.76%) to do it.
NASDAQ: TTD
Key Data Points
The Trade Desk brings ad buyers and sellers together. The adtech specialist helps its customers optimize their marketing campaigns across a wide array of digital formats. Its Kokai media-buying platform uses artificial intelligence (AI) to harvest actionable insights from millions of ad impressions in real time. Kokai is designed to be a trusted copilot for marketers seeking to buy the right ad at the right price and place it in front of their desired audience at the correct time.
Advertisers, in turn, are flocking to The Trade Desk's platform. Its revenue jumped 23% year over year to $464 million in the second quarter, while its adjusted earnings per share soared 40% to $0.28.
Yet despite this impressive growth, The Trade Desk still accounts for just a small fraction of the roughly $830 billion in annual global ad spending. With AI fueling its expansion, this adtech leader is set to become a much larger business in the coming years.
