Market volatility has been called the admission price for the higher returns that stocks offer compared to other assets. It doesn’t make it easier to exit a slowdown. This is why many suggest keeping the cash on hand to profit from it when even the best companies are falling sharply.
At the moment, I am buying more shares of Atlassian (NASDAQ: TEAM) and Inari Medical (NASDAQ: NARI). While investors expect strong growth, I believe they will. Let’s take a look at the benefits of each company, as well as how it has already generated profitable growth since going public.
Companies use an average of 288 software applications. This creates silos between functions within an organization and even between members of small groups. Atlassian creates work management tools to solve the problem and fulfill its mission of unleashing the potential of each team. He must know what he is doing. Internally, employees are 40% less likely to leave than the industry average and the company has been ranked among the top FortuneThe 100 Best Places to Work Two Years in a Row.
Atlassian has succeeded by focusing on developers and letting products flow naturally when they collaborate with other functions within an organization. This strategy has been successful, with nearly 213,000 customers and over 15 million users to date. The number of customers has already grown faster during the pandemic, although the fiscal year is only three-quarters complete at the last count.
|Fiscal year ending June 30||Customers||Growth|
|2018||125,796||N / A|
This organic growth led to impressive user metrics, even though the company avoided creating a direct sales force. Trello, its cloud-based, customizable Kanban boards, has over 10 million monthly active users (MAUs). This makes it the biggest job management product on the market. Jira, the company’s project management tool and largest revenue generator, has a relatively even split between its technical and non-technical users. This is important because it expands the addressable market. Management estimates its current addressable market to be $ 24 billion and growing. In total, it sees $ 126 billion in annual spending in the markets it serves.
The full line of products has generated nearly $ 2 billion in revenue in the past 12 months. For the quarter ending March 31, revenue increased 38%. It has been consistent. The top line grew 38% on average over the previous three- and five-year periods. Unlike many other tech companies, this growth doesn’t come at the cost of burning cash. Atlassian was cash flow positive even before its IPO in 2015. Since then, free cash flow – what remains after running the business and investing for growth – has exceeded revenue by nearly 2 for 1.
Beyond growth and profitability, Atlassian has leadership prepared to make tough choices for long-term gains. For one thing, it stopped selling its data center product, only offering the cloud-based version instead. This will allow for faster iteration of the product and provide updates to customers more often. Another example is its partnership with Soft. In it, Atlassian agreed to quit the chat business, instead migrating its customers to its competitor. The pair have released nearly a dozen product integrations between them since. It’s not easy for a founder to do, and it’s the kind of decision-making that gives me peace of mind buying shares of Atlassian even as the stock has fallen 14% from its stock. Mountain peak.
2. Inari Medical
Inari Medical went public at the end of May last year and its share price has more than doubled in a year. Investors are excited about its products to treat clots without expensive and risky drugs. Although hospitals’ focus on the coronavirus limited Inari’s access to potential clients last year, it has still seen incredible growth. Revenue soared 173% in 2020 to $ 139.7 million, while net income jumped 2,200%. In what seems to defy Wall Street logic, the company was close to doubling sales and turning a profit. What is more convincing than the numbers is Why its products are adopted so quickly.
The FlowTriever and ClotTriever devices remove blood clots and are easy to use. They replace risky drugs that require expensive stays in intensive care units. These drugs, called thrombolytics, are currently the most common treatment, although they can cause severe bleeding, require multiple hospital stays and can be very expensive. And that’s when patients can get them. Up to half of the patients are contraindicated, which means that there are circumstances suggesting that they should not be treated with thrombolytics.
The devices target deep vein thrombosis (DVT) – a condition where clots form in the leg – and pulmonary embolism (PE) – a clot that has traveled to the lungs. Management estimates that DVT and PE affect approximately 668,000 and 400,000 patients per year, respectively. Both have long-term effects on a patient’s lifestyle, and PE is the third leading cause of preventable death in hospitals. This is why a more effective, cheaper and safer treatment is proving so popular.
Inari maintained sizzling growth in the first quarter ending in March. Revenue grew 113% year over year and the company has maintained its streak of earnings every quarter since going public. With a transformational solution for over a million patients per year, along with the rare combination of hyper-growth and profitability, the gains could add up quickly. Despite the recent 32% drop, I am happy to add stocks to my portfolio.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.