Smart investors study and understand trends. Industry trends, financial trends, and market trends can all play a part in determining which stocks rise and fall over time.

With that in mind, let's have a look at two companies that are riding long-standing trends to great success.

A lightbulb with a dollar sign in it.

Image source: Getty Images.

Spotify

The operator of the world's largest music streaming app, Spotify (SPOT 0.20%) turned in a magnificent 2023, as music fans increasingly turn to paid or ad-supported streaming to hear their favorite hits.

According to 2022 RIAA statistics, compiled by Visual Capitalist, 89% of music revenue is now generated via digital formats. Moreover, 78% of the industry's total revenue of $15.9 billion comes from paid or ad-supported streaming.

In short, the music industry has already gone digital, and that has, in turn, revitalized it. After peaking at $23.7 billion in 1999, U.S. music sales steadily declined. They hit a low of $7.7 billion in 2014 -- a peak-to-trough decline of more than two-thirds. However, since then, revenue has nearly doubled thanks to improved internet and wireless speeds, cordless earbuds, smartphones, and streaming services like Spotify.

Spotify is riding the resurgence, and its fundamentals are looking better than ever. In its most recent quarter (the three months ending on Sept. 30), the company reported 11% revenue growth as monthly average users (MAUs) jumped 26% to 574 million. Overall, subscribers grew 16% to 226 million, and the company generated 216 million euros in free cash flow.

Spotify has two trends propelling it forward: the secular trend of music streaming, and its own growing popularity with subscribers. Growth investors should keep an eye -- and perhaps an ear -- on the company. It's a growth stock worth considering right now.

Airbnb

Airbnb (ABNB 0.75%) is a stock that every growth investor should be watching. Granted, there are concerns, so let's address those head-on.

First, Airbnb's lifetime performance as a publicly traded stock is not great. Since debuting in 2020, shares have moved lower by 12%. What's worse, Airbnb stock remains 41% below its all-time high. And that's despite a 50% year-to-date rally.

ABNB Chart

ABNB data by YCharts

Second, it seems everyone has a bone to pick with the company. Guests have complained about cleaning fees and extensive checkout procedures; hosts complain about guests violating house rules. Moreover, some locales have raised concerns that an abrupt rise in short-term rentals upend communities and result in unaffordable housing for locals.

Each of these concerns is worth noting, and the company will have to address them. Nevertheless, the fact remains: despite the negativity, the business continues to grow. As a result, Airbnb's fundamentals are stellar and show no signs of weakening.

In fact, the company's financials have improved to such a degree that Airbnb stock looks downright cheap at current levels.

Airbnb's growth remains strong; the company is growing revenue at a current rate of 18% year over year. Earnings and free cash flow are going through the roof. Net income over the last 12 months was $5.5 billion; free cash flow has surged to $4.2 billion.

As a result, the stock's valuation keeps improving. Take Airbnb's price-to-earnings (P/E) multiple. It started the year at 35. It now stands at 15. That's down 57% year to date and more than 70% below the stock's lifetime average of 52.

ABNB PE Ratio Chart

ABNB PE Ratio data by YCharts

Airbnb remains a polarizing company and stock. There are, however, several reasons for growth investors to snap up shares right now, including its consistent revenue growth, ample free cash flow, and attractive valuation. In short, it has everything a growth investor should be looking for.