3 stocks that beat the market in 2021 and could do it again in 2022


When you are looking for investment ideas for 2022, it is worth looking at stocks that beat the market in 2021. Savvy investors know that winners tend to keep winning, so choose stocks that are already in the market. Best in the market category can increase your chances of investing success.

We asked three long-time investors to choose their favorite stock from the market this year, which has a good chance of performing again. they have chosen Asana (NYSE: ASAN), DigitalOcean (NYSE: DOCN), and Apple (NASDAQ: AAPL).

Image source: Getty Images.

Asana: Helping Coordinate Tasks in a Hybrid Work Environment

Brian Withers (Asana): Asana is a software-as-a-service company that helps teams and businesses coordinate who is doing what and when. As employers try to figure out how to handle a long-term remote or hybrid workforce, this work management software just might be the ticket. The stock has taken off this year and has more than doubled since the start of the year. Let’s take a look at the most recent quarter to see why.

Metric

Q3 2020

Q2 2021

Q3 2021

Change (QOQ)

Change (YOY)

Income

$ 59 million

$ 80 million

$ 100 million

26%

70%

Total paying customers

89,000

107,000

114,000

seven%

28%

Paying customers> $ 5,000 per year

8 938

12,806

14,143

ten%

58%

Data Source: Company Profit Reports. QOQ = quarter to quarter. YOY = year after year.

Revenue is growing at a staggering 70% year-over-year and 26% quarter-over-quarter. The total number of paying customers rose to 114,000, an increase of 28% over the previous year. Since customers don’t grow as fast as revenue, it means existing customers are spending more. This is supported by the big customers (who pay over $ 5,000 per year) increasing 58% year over year and Asana’s constant dollar net retention rate of 115% or better.

These results are impressive and support the stock’s huge growth so far, but what could make it a new beaten market in the year to come? First of all, the business is just getting started. Almost 100,000 of its customers pay less than $ 5,000 a year. This is a huge opportunity to land and grow with your existing customer base. This should be facilitated by the fact that an effective team collaboration tool is most useful when used as part of a larger team effort. With 739 of its clients spending over $ 50,000 per year, it’s clear that businesses have benefited from expanding employee numbers across the business.

Second, the market for collaborative applications and project and program management tools is huge. Management estimates that the market could reach over $ 50 billion by 2025. With an annual execution rate of $ 400 million, it has less than 1% market share.

This title is not without risks, however. It has seen a significant pullback and is now over 40% of its early-year high. Even in hindsight, the stock is valued at a price-to-sell ratio of 35. The company will need to continue posting strong growth numbers to support its valuation. But given the rigidity and growth of its powerful platform, you’d be smart to pick up this gem because this market beater could be ready for another year of great performance.

Two engineers chatting in a server room.

Image source: Getty Images.

DigitalOcean: Earn Big Returns Serving Small Businesses

Will healy (Digital Ocean): DigitalOcean has successfully targeted a segment of the cloud industry ignored by the bigger players. It provides cloud infrastructure services to small and medium-sized businesses (SMBs), businesses that are often too small to support a full-fledged IT department.

However, its most compelling competitive advantage may come from the DigitalOcean community. Developers within this community can receive and help each other to meet various challenges. This is invaluable to an IT department as a person supports their product and gives those customers a good reason to bypass large vendors like Amazon and Microsoft.

Simple pricing is another advantage. This greatly facilitates transactions with DigitalOcean for its nearly 600,000 customers in 185 countries. In addition, with the acquisition of Nimbella, DigitalOcean can now offer serverless computing. This will eliminate server management needs and enable one-click deployment of APIs, software that allows applications to communicate with each other.

Investors also took to the company. Despite a sharp decline in recent weeks, DigitalOcean stock has risen by more than 90% since its IPO in March. Financial data likely helped, with revenue for the first nine months of 2021 reaching $ 309 million, 34% more than in the first three quarters of 2020. Additionally, it lost $ 7 million over the course of of this period, a considerable improvement over the first nine. month of 2020 when the company lost $ 30 million.

In addition, the company projects between $ 426 million and $ 428 million in revenue in 2021. Analysts estimate that figure could reach $ 563 million on a consensus basis in fiscal year 2022, a 32% increase if the forecasts are confirmed. Thus, financial data could continue to push DigitalOcean stock higher.

True, even after the stock has fallen 40% from its high, its price-to-sell (P / S) ratio stands at 19. This is higher than Microsoft’s sell multiple of 14 or the ratio. from Amazon 4.

Still, even with a higher valuation, selling may be the worst mistake DigitalOcean investors can make right now, as SMEs make up 99.7% of all businesses in the US alone. This leaves the company with a huge addressable market that could benefit from a cloud product geared towards such companies.

Four people using a mobile device while waiting.

Image source: Getty Images.

Apple: Countering the downtrend in technology

Danny Vena (Apple): In a year when high-growth tech stocks struggled to keep pace with the wider market, it seemed like there was a flight to bigger, more secure, and more established companies – and Apple’s ‘is certainly qualified in all respects.

The tech giant retained the title of the largest publicly traded company on the planet. Apple’s market cap has risen to $ 2.86 trillion (as of this writing) and market watchers are taking bets on whether or not the stock will break above the $ 3 trillion benchmark before the clock does not end in 2021.

There were many reasons why investors looking for a safe haven flocked to the iPhone maker.

Apple has more than one billion active iPhones globally, giving the company a captive audience for its services, including Apple TV +, Apple Music, Apple News +, and Apple Card. These relatively recent additions join perennial favorites like iTunes, the App Store, and iCloud, to name a few. This growing list of services generated more than $ 68 billion last year, up 27%, and accounting for nearly 19% of Apple’s revenue in fiscal 2021.

IPhone sales dominated fiscal 2021, growing 39% year-over-year and grossing nearly $ 192 billion. It’s also worth mentioning that there are around 25% active iPhones in the upgrade window, putting Apple squarely in the much-vaunted multi-year “super cycle”. Strong demand for the iPhone 13 suggests it is the device many have been waiting for, which would undoubtedly push Apple’s results higher. The holiday season is often the most important quarter for the company’s sales and business is booming, with reports of high demand and increasing wait times.

Not only that, but iPhone accessories are a big deal. This includes companion products like the Apple Watch and AirPods. The company’s clothing, home and accessories segment has grown to become an important part of its business, generating sales of $ 38 billion, up 25%, and generating more than 10% of Apple’s revenue. ‘last year.

There are other reasons investors have sought refuge at Apple this year. It has a strong balance sheet with nearly $ 66 billion in net cash. The company also has a profit margin above 25%, and its strong net income is fueling its steadily increasing dividend, which has grown over 130% since 2012. Add to that a payout rate of just 15% and it’s clear. that even in the times, Apple’s dividend is as secure as it gets.

Given the continued strong demand for its flagship iPhone and steadily growing ancillary business, it’s easy to see why Apple stock has gained 31% so far in 2021 (as of this writing), exceeding earnings by 24% of the S&P 500. I believe that not only will Apple quickly surpass a market cap of $ 3 trillion, it will beat the market. again in 2022.

10 stocks we prefer at Asana, Inc.
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* Returns of the portfolio advisor as of December 16, 2021

Teresa Kersten, an employee of LinkedIn, a subsidiary of Microsoft, is a member of the board of directors of The Motley Fool. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of the board of directors of The Motley Fool. Brian Withers has no position in the stocks mentioned. Daniel Vena owns Amazon, Apple and Microsoft. Will Healy is the owner of Digitalocean Holdings, Inc. The Motley Fool owns and recommends Amazon, Apple, Asana, Inc., Digitalocean Holdings, Inc. and Microsoft. The Motley Fool recommends the following options: January 2022 long calls at $ 1,920 on Amazon, March 2023 long calls at $ 120 on Apple, January 2022 short calls at $ 1,940 on Amazon, and short calls March 2023 at $ 130 $ on Apple. 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.


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