01 Feb 3 US Companies Primed for Growth for the Next Decade
To find great companies, it helps to start from growth trends that are sustainable.
After all, trends that can last for years, or even decades, can act as tailwinds for growth companies.
As humans adapt their habits due to the pandemic, certain trends have come to the fore.
Some of these trends have been strengthened by the pandemic, while others have risen to prominence as businesses adapted their operations.
On that note, we have identified three businesses that are latching on to growth trends and posting impressive growth.
One deals with e-commerce and online payments, the other is a leader in digital food and beverage sales, and the last focuses on cybersecurity.
All three have the potential to enjoy many years of growth by riding on these tailwinds.
Mercadolibre (NASDAQ: MELI)
Mercadolibre is the leader in online payments and e-commerce in Latin America and has seen its business boom last year.
The pandemic greatly accelerated the shift from physical to online modes of transacting and payment.
As a result, data usage exploded as people were compelled to switch to digital modes of communicating and shopping.
For its third quarter 2020 earnings, the company reported that unique active users surged 92.2% year on year to reach 76.1 million.
Gross merchandise volume, a measure of activity on the company’s e-commerce platform, jumped by over 62% year on year during the quarter to US$5.9 billion.
At the same time, the number of items sold more than doubled from 98 million to 205.7 million.
Payment volume on the company’s Mercado Pago platform soared almost 92% year on year to US$14.5 billion, with transactions more than doubling to nearly 560 million.
Mercadolibre continues to work on improving its logistics network to strengthen its competitive advantage in the region.
Its Mercado Envios logistics network enjoyed increased adoption to 74% by the end of the quarter.
Chipotle Mexican Grill (NYSE: CMG)
Chipotle Mexican Grill, or CMG, owns a chain of over 2,700 restaurants located in the US, Canada, the UK, France and Germany as of 30 September 2020.
The company serves up a menu of Mexican-themed dishes such as tacos and burritos, and its ingredients do not have artificial flavours, colours or preservatives.
Despite the pandemic causing restaurants around the world to temporarily shutter, CMG was able to pivot towards digital sales and continued posting growth.
Its third-quarter results demonstrated this impressive feat.
Revenue rose 14.1% year on year to US$1.6 billion, accompanied by an 8.3% year on year increase in comparable store sales.
Digital sales tripled year on year to US$776.4 million and made up close to half of total sales for the company.
CMG opened 44 new stores during the quarter, of which 26 included a “Chipotlane”.
A Chipotlane is a modified drive-thru area for customers to place their order through a mobile app or website. They will be able to collect their order without leaving their cars, a boon when it comes to avoiding crowds due to the pandemic.
CMG had also worked with delivery partners to fulfil orders during these challenging times, thereby allowing the business to thrive despite the crisis.
The company has doubled down on its digital efforts by announcing, last November, that it will be opening its first digital-only restaurant that’s designed for pick-up and delivery only.
Such a design represents the future as more people order deliveries or drive by to pick up their orders, and CMG can also enjoy better margins as less space is required for these new formats.
Crowdstrike (NASDAQ: CRWD)
Crowdstrike is a company providing cloud protection solutions by leveraging on artificial intelligence.
Its platform, known as Falcon, protects customers against cyberattacks by offering both visibility and protection across the entire enterprise.
Cybersecurity has been thrust into the limelight following high-profile cyber attacks in recent months.
In December last year, a devastating cyberattack was launched by hackers on US government agencies, with victims also coming from countries such as Belgium, Canada and Spain.
The threat allegedly stemmed from malicious software injected into a Texas-based IT company called SolarWinds, allowing hackers access to sensitive information from government agencies and Fortune 500 companies.
Sadly, that’s not the only incident.
Just last month, New Zealand’s central bank admitted that a third-party file-sharing service that stored sensitive information had been illegally breached.
Crowdstrike’s third-quarter revenue jumped 86% year on year to US$232.5 million, and the business added 1,186 net new subscription customers.
Subscription gross margin improved to 77% from 74% reported in the same period last year.
With cybersecurity becoming an increasingly critical component of many organisations, Crowdstrike should see its business continue to boom.
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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.