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A tried and tested way of making money in the stock market is buying and holding solid companies for the long run. This strategy allows investors to capitalize on secular growth trends and helps them benefit from the power of compounding.
However, investors looking for outsized gains may want to look for fast-growing companies that have the potential to outperform the broader market. This is where growth stocks come in. Typically, companies that have developed disruptive products are capable of increasing their revenue and earnings at a much faster pace than the markets in which they operate, and this allows them to deliver above-average returns.
The following are three such companies that are growing at an impressive pace and also seem capable of sustaining their momentum in the long run, leading to potentially healthy gains for investors.
1. Confluent
Confluent (NASDAQ: CFLT) is scratching the surface of a massive opportunity within the data streaming market, which is worth an estimated $60 billion according to the company’s estimates. By 2025, Confluent estimates that its addressable market could hit an impressive $100 billion. The company has generated $732 million in revenue in the trailing 12 months, which means that it has tapped just over 1% of its total addressable market.
By using Confluent’s platform, customers can make real-time decisions by connecting their data instead of storing it in silos and processing it in batches later on. The company has been recording impressive growth in its customer base and is setting itself up to take advantage of the long-term opportunity at hand.
Confluent finished the third quarter of 2023 with 4,910 customers, an increase of 16% over the prior-year period. The good part was that the number of large customers increased at a faster pace thanks to higher spending. Customers with more than $100,000 in annual recurring revenue (ARR) were up 25% year over year to 1,185, while those with more than $1 million in ARR increased at a faster pace of 38%.
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