Hunting for the next big thing among tech stocks is akin to finding the dimmest stars. In this context, three companies are set to chart a course towards doubling your investment by 2025. Each company, a titan in its own right, unveils a unique tapestry of strategies, innovations and market prowess, promising a lucrative return.
These aren’t just tech stocks, but narratives of triumph, resilience and strategic prowess in an ever-competitive technological arena. Read more to uncover the intricate threads of success woven by these tech giants.
HubSpot (HUBS)
HubSpot’s (NYSE:HUBS) ability to expand and retain its customer base is pivotal to its sustained growth. For instance, in Q3 2023, there was an increase of 22% year-over-year in the total number of customers to over 194K. This increase is accompanied by a net addition of 9.1K customers in the quarter. Thus, this suggests the company’s capacity to attract and retain a substantial customer base.
Fundamentally, the net addition of customers showcases the effectiveness of HubSpot’s marketing and sales efforts in attracting new clientele. The company can continuously bring in new customers, irrespective of the market challenges. This indicates the perceived value of its offerings in the market. Hence, maintaining a healthy gross retention rate in the high 80s signifies HubSpot’s successful efforts in retaining its existing customers.
While attracting new customers is crucial, HubSpot has led in upselling to existing customers, as reflected in the growth of Average Subscription Revenue per Customer (ASRPC). This suggests the company can offer additional value and premium services to its user base. HubSpot can increase the ASRPC, as evidenced by a 1% year-over-year growth in constant currency and 3% as reported to $11.5K.
Specifically, the growth in ASRPC is indicative of several underlying factors. The first on the list is encouraging multi-hub adoption among professional and enterprise customers. The second is HubSpot’s capacity to upsell higher-value services, features, or tiers to its existing customer base, which reflects the perceived value of its offerings and the effectiveness of its upselling strategies.
Finally, the increase in HubSpot’s ASRPC is likely tied to its targeted efforts in cross-selling and upselling. Thus, the ability to effectively market and sell additional services or features to customers indicates the strength of its sales and marketing strategies.
Jabil (JBL)
Jabil’s (NYSE:JBL) fundamental strengths are effective performance and revenue mix management. For instance, Q1 fiscal 2024 revenue of approximately $8.4 billion was slightly below the guidance range but aligned with updated expectations. The revenue decline in the Diversified Manufacturing Services (DMS) segment by around 6% was offset by growth in automotive, transportation and healthcare businesses.
Meanwhile, the Electronics Manufacturing Services (EMS) segment experienced a more significant revenue decrease of about 21% due to transitioning to a consignment model and softening demand in certain markets.
At the bottom line, Jabil reported a core operating income of $0.499 billion for the quarter, marking a noteworthy increase of 1.2% year-over-year. This improvement in core operating income was primarily attributed to an enhanced business mix, seasonal patterns within certain segments and impacts on assets held for sale. Moreover, core operating margins for the company stood at approximately 6%. This represents a 0.50% increase year-on-year, excluding the impact of assets held for sale.
Furthermore, regarding liquidity, Jabil delivered a strong cash flow generation in Q1. In detail, $448 million was generated from cash flows from operations and $173 million in adjusted free cash flow. The company also engaged in a significant share repurchase of $500 million, ending Q1 with $1.6 billion in cash balances and maintaining a total debt-to-core EBITDA level of approximately 1.1 times. Therefore, Jabil’s robust cash flow performance and prudent financial management suggest its financial stability and disciplined capital allocation.
In short, this option in tech stocks can generate substantial cash flows from its operations while strategically utilizing capital for share repurchases, which suggests its focus on enhancing shareholder value.
Axcelis (ACLS)
Axcelis (NASDAQ:ACLS) dominates the power market, representing over 60% of its system shipments for multiple quarters. This proves the company’s specialization and leadership in this segment. Fundamentally, Axcelis has product alignment with industry needs, potentially through innovative technology or cost-effectiveness in serving power-related semiconductor manufacturers. Thus, the strong foothold in this segment is due to specialized offerings tailored to the unique requirements of power device manufacturing.
Additionally, the balanced geographic mix of system shipments demonstrates Axcelis’s global presence, reducing its dependency on any single market. The distribution of shipments across various regions showcases the company’s ability to cater to diverse customer needs, adapt to regional market trends and effectively penetrate different markets.
Silicon carbide’s pivotal role in Axcelis’s growth trajectory reflects the company’s strategic focus on emerging semiconductor technologies. Around 35% of total system revenue is will come from silicon carbide applications in 2023. This signifies Axcelis’s alignment with market trends and its capabilities to cater to the evolving needs of the semiconductor industry.
Moreover, the Purion Power Series product portfolio, featuring Purion H200 and Purion XE silicon carbide systems, demonstrates Axcelis’s commitment to offering comprehensive solutions for silicon carbide device manufacturing. This comprehensive product range makes the company a reliable one-stop solution provider in the silicon carbide segment.
Finally, Axcelis’s substantial backlog of $1.2 billion (Q3 2023) suggests the company’s order visibility and sustained customer demand. Hence, the robust backlog signifies the company’s ability to secure orders and suggests its competitive edge over other tech stocks.
On the date of publication, Yiannis Zourmpanos did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.