As the world recovers from the effects of the pandemic, growth is now the new buzzword.
A wide swath of companies has seen their revenue and profit rebound sharply after the economic recession last year.
Stock markets all over the world have been on a bull run ever since.
Companies that offer cloud services through platforms have done extremely well, as have businesses that sell a range of necessities for everyday use.
As an investor, keeping an eye out for businesses that can continue to take advantage of such growth opportunities can greatly increase your chances of supercharging your portfolio’s returns.
If you’re gunning for strong growth, here are three companies that can help to power your portfolio to greater heights.
DocuSign (NASDAQ: DOCU)
DocuSign is a company that offers an electronic signature service on its cloud platform, helping organisations to automate how they prepare, sign and manage agreements.
The pandemic has accelerated digital adoption and led to a surge in demand for DocuSign’s services.
For its fiscal 2022 second quarter (2Q2022), revenue jumped by 50% year on year to US$511.8 million.
Of this amount, subscription revenue made up 96.3% and rose 52% year on year to US$492.8 million.
Billings also increased by 47% year on year to US$595.4 million, reflecting continued strong demand for the company’s services.
Free cash flow surged from US$99.8 million in the prior year’s quarter to US$161.7 million.
DocuSign is also steadily growing its customer base, with slightly more than one million customers at the end of the quarter, up from 892,000 at the end of its fiscal year 2021 (FY2021) ended 31 January 2021.
Of these, 148,000 were enterprise and commercial customers, up from 125,000 as of FY2021.
As of 31 July, the company enjoyed a net dollar retention rate of 124%, while the number of customers with an annual contract value greater than US$300,000 rose to 714 from 599 as of FY2021.
DocuSign plans to grow its business internationally, and for 2Q2022, international revenue made up 22% of total revenue.
Its international business grew faster than the group’s revenue, rising 71% year on year.
The good news is that gross margin is also rising as subscription revenue grows, hitting a two-year high of 82%.
Shopify (NYSE: SHOP)
Shopify runs a platform that offers internet infrastructure and tools for entrepreneurs to start, grow, market and manage their businesses.
Founded in Canada, Shopify powers more than 1.7 million businesses in more than 175 countries.
For its fiscal 2021 second quarter (2Q2021) ended 30 June 2021, the company saw revenue soar by 57% year on year to US$1.1 billion.
As more merchants joined its platform, subscription services revenue jumped up 70% year on year to US$334.2 million.
Gross merchandise volume (GMV) also rose in tandem with the increase in merchants, hitting US$42.2 billion, up 40% year on year.
Gross payment volume (GPV) now accounted for 48% of GMV, up from 45% in the second quarter of 2020.
Net profit jumped from US$36 million to US$879.1 million, but this included an unrealised gain on equity investments of US$778 million.
Even after excluding this exceptional item, net profit would have more than doubled year on year to US$101.1 million.
Shopify continues to build on its platform with the introduction of faster, scalable and more customisable checkout with Shopify Checkout.
Its Shopify Fulfilment Network includes features to help merchants to manage products on its platform, improve shipping speed and accuracy, and manage preferences such as staff notifications.
Stanley Black & Decker (NYSE: SWK)
Founded in 1843, Stanley Black & Decker, or SBD, is a global diversified industrial company that manufactures and supplies tools, fasteners and security systems.
The company has a stellar record of 145 years of consecutive dividend payments and owns a portfolio of brands such as Stanley, DeWalt, Black & Decker, Bostitch and Craftsman.
For 2Q2021, SBD reported a 36.6% year on year increase in revenue to US$4.3 billion, while net profit surged by 94.4% year on year to US$454.4 million.
A dividend of US$0.70 per share was declared for the quarter, and management has announced a 13% increase in the dividend to US$0.79 for its next quarter.
The company believes there are significant catalysts to support a multi-year growth runway, with more people reconnecting with their homes and gardens amid the pandemic.
Last month, SBD acquired the remaining 80% stake in MTD Holdings Inc, a global manufacturer of outdoor power equipment, for US$1.6 billion in cash.
This acquisition will create a global leader in outdoor products and MTD owns brands such as Cub Cadet and Troy-Bilt along with a portfolio of products such as lawn tractors, snow blowers and garden tools.
This purchase will result in cumulative cost savings of around US$100 million by 2025 and also add to the company’s earnings per share.
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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.
