2 monster growth stocks beating the bear market this year
As the second half of 2022 kicks off, investors are hoping for a smoother stock market run compared to the past six months. High inflation has wreaked havoc on the economy, and since higher interest rates are the cure, people are feeling the pinch on multiple fronts.
However, there are some early signs that these pressures are easing, with the price of some key commodities rapidly reversing from all-time highs. Still, the tech sector is taking a beating at the moment, with the Nasdaq-100 the index is trading in a bear market after losing more than 27% since the start of the year.
But here are two tech stocks that largely resist pessimism and are well-positioned to continue to outperform through the rest of the year.
Duolingo (DOUOL -14.34%) is a global leader in the emerging digital language education industry, and was among the very few tech stocks to show green in 2022 until an analyst rating knocked its positive performance down in the negative Monday. Still, its 11% year-to-date decline far outpaces the Nasdaq-100 at this point in the year.
Duolingo has found success by reinventing the educational experience, taking a mobile approach, and gamifying its platform to feel less like learning and more like entertainment. It introduced a paid subscription option in 2018 for users who want to unlock additional features, and it quickly skyrocketed in the rankings to become the top-grossing educational app in Alphabet‘s Play Store, and the second highest of Applefrom the App Store.
Duolingo has amassed 49.2 million monthly active users, 2.9 million of which now pay subscription fees. The latter number increased by 60% in the first quarter of 2022 compared to the period of the previous year, and it increases steadily each year in percentage of active users. This is an indication that users are getting great value from the Duolingo platform, and as the company continues to add new languages and integrate features powered by advanced tools like artificial intelligence, it is not a surprise.
Duolingo estimates it will generate $353 million in revenue in 2022, which would represent a 41% jump from its 2021 result. The company targets an addressable market of 1.8 billion foreign language learners in the world, and since the app has only been downloaded around 500 million times so far, it still has plenty of room for growth.
Cybersecurity is a key cost item that the corporate world will not compromise on right now, even in tough economic conditions. At least that’s the indication of several surveys of business leaders over the past 12 months. The threat landscape continues to grow more dangerous as organizations move a greater percentage of their operations online, leaving them vulnerable to attack from anywhere in the world.
Defensible (TENB -1.02%) is the cybersecurity industry leader in vulnerability management and threat detection, and is experiencing strong growth as organizations adopt more advanced tools that can proactively find and eliminate risks before they occur. cause costly damage. Tenable’s Nessus platform is ranked #1 in adoption, serving 30,000 organizations with over 2 million individual downloads, and it also tops the charts in accuracy and coverage, protecting against vulnerabilities and exposures (CVEs) more common than any of its competitors.
The company grew its annual revenue at a compound rate of 34% between 2016 and 2021, and it could generate up to $679 million in 2022, according to its forecast. This would mark a slight deceleration in growth to 25%, but as revenue figures rise it becomes more difficult to sustain high rates of increase.
But more importantly, it’s Tenable’s biggest customers who are driving much of the company’s growth. The number of organizations spending $100,000 per year (or more) with Tenable grew from 124 in 2016 to 1,095 in 2021, a compound annual growth rate of 54%. The increase continued in the first quarter of 2022, as it added 17 more. It highlights the growing attention to cybersecurity in the corporate sector.
Sustainable stocks are down 7% in 2022, but they still crush the Nasdaq-100. And remarkably, not one of the 15 Wall Street analysts who cover Tenable recommends selling it, indicating expectations for future demand for advanced cybersecurity tools.
Suzanne Frey, an executive at Alphabet, is a board member of The Motley Fool. Antoine Di Pizio has no position in the stocks mentioned. The Motley Fool has positions and recommends Alphabet (A shares), Alphabet (C shares) and Apple. The Motley Fool recommends the following options: $120 long calls in March 2023 on Apple and short calls $130 in March 2023 on Apple. The Motley Fool has a disclosure policy.