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3 US-Listed Growth Stocks Powering the "Anywhere Economy"

profileSudhan P

The “anywhere economy” is a term coined by DocuSign‘s (NASDAQ: DOCU) chief executive officer, Dan Springer.

In a company blog post in March, Springer explained what the term’s all about:

“The anywhere economy is driven by the goods and services that address an increasing expectation: anything, anytime, anywhere, all enabled by the Internet. While the traditional economy faltered during the pandemic, the anywhere economy surged. Companies like Zoom, Netflix and Amazon became providers of essential services for work, life and sanity.”

The COVID-19 pandemic has crystallised things such as e-commerce, streaming services, and alternative working arrangements as norms rather than expectations.

Here are three companies, which are not Zoom, Netflix, Amazon and DocuSign, that enable the anywhere economy and could see plenty of growth ahead.

Company #1: Adobe

Adobe Inc (NASDAQ: ADBE) is one of the world’s largest and most diversified software companies, providing products and services used by creative professionals, communicators, and consumers.

Almost every one of us would’ve used Adobe’s products, especially Adobe Acrobat Reader, to open a document in the Portable Document Format (PDF) format.

Other than Acrobat, here are some of the other products under the Adobe brand:

Source: Adobe investor datasheet

For Adobe’s second quarter of the fiscal year 2021 (three months ended 4 June 2021), its revenue rose 23% year-on-year to US$3.84 billion while its operating income grew at a faster rate of 38% to US$1.41 billion.

Net profit improved 1.5% to US$1.12 billion while cash flow from operations hit a record U$1.99 billion, up 68% year-on-year.

Adobe’s president and chief executive, Shantanu Narayen, commented the following about his company’s latest performance, highlighting the role Adobe plays in the anywhere economy:

“Adobe had an outstanding second quarter as Creative Cloud, Document Cloud and Experience Cloud continue to transform work, learn and play in a digital-first world. … Our innovative product roadmap and unparalleled leadership in creativity, digital documents and customer experience management position us for continued success in 2021 and beyond.”

There’s plenty of room for the company to grow still as Adobe’s last twelve months revenue of US$14.4 billion is small compared to its total market opportunity of around US$147 billion.

Source: Adobe investor presentation

At Adobe’s share price of US$565.59, it has a price-to-sales (P/S) ratio of 19x and a price-to-earnings (P/E) ratio of 49x.

Company #2: Fastly

Fastly (NYSE: FSLY) is one of the world’s most widely-used cloud-based content delivery network (CDN) providers.

The company was in the news earlier this month as it caused a widespread hour-long internet outage. Thousands of well-known websites, including Reddit, Amazon, PayPal, and Spotify, were affected by the Fastly-linked glitch.

Websites rely on Fastly and other CDN providers to move content using less-congested routes, enabling them to reach consumers like you and me faster.

With more and more people on the internet and wanting websites to load instantaneously, work is cut out for Fastly.

For Fastly’s 2021 first-quarter, revenue grew 35% year-on-year to almost US$85 million, and the growth has been strong over the past years.

Source: Fastly investor presentation

In Fastly’s 2021 first-quarter press release, the company’s chief executive Joshua Bixby said (emphasis is mine):

“We are observing that many of the trends that emerged last year appear to have become permanent, even as the world begins to reopen. Fastly is uniquely positioned to serve companies as they adjust to this new reality, by seamlessly combining delivery, edge computing, and security. We are more confident than ever in our ability to deliver on our edge cloud mission and will continue investing in it to position our company for future growth.”

At Fastly’s share price of US$56.96, it has a P/S ratio of around 20x.

Company #3: Okta

Okta (NASDAQ: OKTA) is the largest independent provider of identity solutions, helping companies manage and secure user authentication for online applications.

More than 10,650 companies, including Siemens, Slack, and Twilio rely on Okta to help protect the identities of their workforces and customers.

As more and more companies allow their employees to work from anywhere, Okta’s services will become more essential.

Source: Okta investor presentation

For Okta’s first quarter ended 30 April 2021, total revenue grew 37% year-on-year to US$251 million, up from US$183 million a year ago.

Okta’s dollar-based net retention rate has also been stable at 120% for the quarter. This metric measures the change in spending for its customers a year ago compared to today’s same group of customers.

Over the longer run, the company has a target of hitting US$4 billion in revenue and 20% in free cash flow (FCF) margin by FY2026 (financial year ending January 2026). Currently, Okta’s FCF margin stands at around 15%.

Source: Okta investor presentation

Okta should be able to achieve its FY2026 target, given its market-leading position and massive market opportunity.

At Okta’s share price of US$239.26, it has a P/S ratio of around 34x.

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Disclaimer: The information provided by Seedly serves as an educational piece and is not intended to be personalised investment advice. ​Readers should always do their own due diligence and consider their financial goals before investing in any stock. The writer owns shares in Adobe and Okta. 

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About Sudhan P
It isn't fair competition when only one company in the world makes Monopoly. But I love investing in monopolies. Before joining the Seedly hood, I had the chance to co-author a Singapore-themed investment book – "Invest Lah! The Average Joe's Guide To Investing" – and work at The Motley Fool Singapore as an analyst.
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