When looking for investment ideas for 2022, it pays to look at those stocks that have beaten the market in 2021. Savvy investors know that winners tend to keep on winning, so picking stocks that are already in the market-beating category can increase your odds of investing success.
We asked three longtime investors to pick their favorite market-beating stock from this year that has a great chance of repeating its performance. They picked Asana(NYSE:ASAN), DigitalOcean(NYSE:DOCN), and Apple(NASDAQ:AAPL).
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Asana: Helping coordinate tasks in a hybrid work environment
Brian Withers (Asana): Asana is a software-as-a-service company that helps teams and enterprises coordinate who’s doing what and by when. As employers are trying to figure out how to manage a remote or hybrid workforce long-term, this work management software may just be the ticket. The stock has taken off this year, more than doubling since the beginning of the year. Let’s take a look at the most recent quarter to see why.
Total paying customers
Customers paying > $5,000 annually
Data source: Company earnings reports. QOQ = quarter over quarter. YOY = year over year.
The top line is growing at a blistering 70% year over year and 26% quarter over quarter. The total number of paying customers has grown to 114,000, a 28% gain from the previous year. Since customers aren’t growing as fast as the top line, that means existing customers are spending more. That is supported by the large customers (who pay more than $5,000 annually) growing at 58% year over year and Asana’s dollar-based net retention rate consistently at 115% or better.
These results are impressive and support the tremendous growth of the stock so far, but what could make this a market beater again in the coming year? First of all, the company is just getting started. Almost 100,000 of its customers are paying less than $5,000 annually. This is a massive opportunity to land and expand with its existing customer base. This should be aided by the fact an effective team-based collaboration tool is more useful when used as part of a larger team effort. With 739 of its customers spending more than $50,000 annually, it’s clear that companies have benefited by expanding to more employees across the enterprise.
Secondly, the market for collaborative applications and project and program management tools is huge. Management estimates the market could reach over $50 billion by 2025. With an annual run rate of $400 million, it has less than 1% of the market share.
This stock is not without its risks, though. It has experienced a significant pullback and is now more than 40% off its high from earlier in the year. Even with the pullback, the stock is valued at a 35
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