The tech sector is the single best starting place for investors seeking explosive returns today. Investors may have also noticed that the overall technology industry has proven sturdy amid the extreme challenges created by the coronavirus pandemic.
One path to building a portfolio capable of weathering economic volatility and achieving fantastic returns is to home in on the strongest tech trends and identify the companies that are leading and benefiting from them. Three that fit that description are CrowdStrike (NASDAQ: CRWD), Baozun (NASDAQ: BZUN), and Glu Mobile (NASDAQ: GLUU). Each operates in a resilient industry and could deliver market-crushing returns for you.
It's no secret that a growing number of businesses are transitioning their key operations to the cloud. Even before the coronavirus pandemic created conditions necessitating social-distancing and work-from-home measures, businesses were carrying out digital transformations, shifting new projects online, and taking advantage of enterprise software suites that make it easier to bring wide sets of data and apps together, and harness useful features like analytics. All of that bodes well for the cybersecurity industry.
CrowdStrike provides endpoint cybersecurity services for enterprises -- meaning that it lowers the exposure of computers, mobile devices, and servers to hackers and other security threats. Given how much more work is being done online and how much more vital information is being transmitted digitally, there's a greater need than ever for cybersecurity providers that can ensure businesses retain control over their data.
CrowdStrike grew its subscription customer count by 105% year over year last quarter, and total revenue in the period climbed 85%. If it continues to land new customers and increase spending among those already on board, the business could keep posting strong growth.
The company is valued at roughly $25 billion and trades at roughly 32.5 times this year's expected sales. That price-to-sales multiple might give some investors pause, but CrowdStrike is an industry leader with long-term tailwinds at its back, and it could prove relatively sturdy even amid challenging macroeconomic conditions.
China is already the world's largest e-commerce market, and online-retail spending there continues to grow at a rapid pace. E-commerce companies have seen surging engagement due to the coronavirus pandemic, and it's likely that consumers will keep doing more of their shopping through digital channels even after the threat of COVID-19 recedes.
Shanghai-based Baozun operates an e-commerce services platform -- its core business revolves around providing retail website creation services, customer support, marketing, and order fulfillment for major Western brands looking to quickly scale up their footprints in China's e-commerce market. It also runs a similar online retail platform for small businesses in China, but that's at a comparatively early growth stage.
Baozun generates service revenues from its enterprise customers, and it also gets a cut of merchandise sales conducted through its platform. The company counts brands including Microsoft, Nike, Coach, and Godiva among its enterprise customers. It added eight net new brand partners last quarter, bringing its total to 239. The e-commerce services provider has wide avenues for growth as it attracts new partners to its platform and helps them grow their businesses in China.
It's already consistently profitable and trades at roughly 34 times this year's expected earnings. Baozun's market capitalization is roughly $2.8 billion, but that valuation could wind up looking cheap in the not-too-distant future.
3. Glu Mobile
Mordor Intelligence estimates that the global gaming industry will grow from $151.55 billion in 2019 to roughly $257 billion in 2025. And an analysis from GlobalData suggests that the industry's total revenue in 2025 could be even higher -- $300 billion. Interactive entertainment becoming increasingly popular, and top companies in the space have the opportunity to benefit from this trend and deliver strong returns for shareholders.
Game publisher Glu Mobile is still relatively small in its industry. That means it lacks access to some of the resources of its larger rivals, but that also gives the company an easier path to explosive growth.
Glu has a market capitalization of roughly $1.7 billion, and its valuation could soar if the company releases successful new titles. Just one new hit franchise could double the company's stock price -- or send it even higher.
Video games today can have long product life cycles with the help of content updates released periodically that keep players engaged and spending. Glu's lineup of dependable mobile gaming franchises (including Design Home, Covet Fashion, and Tap Sports Baseball) give it a solid sales foundation. The combination of its core properties, new hit potential, and gaming industry tailwinds give the stock the possibility of becoming a breakout winner for investors.
Glu Mobile is valued at roughly 31 times this year's expected earnings.
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Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Keith Noonan owns shares of Baozun. The Motley Fool owns shares of and recommends Baozun, CrowdStrike Holdings, Inc., Microsoft, and Nike and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.