Investors looking to build wealth in the stock market are focusing on long-term strategies that emphasize stocks from competitively positioned businesses. A key area of opportunity lies in innovative companies with strong growth potential, particularly within the tech sector, which has historically yielded robust returns.
Two companies currently stand out: The Trade Desk and Axon Enterprise. Both are poised to make significant gains in their respective markets—digital advertising and public safety. These stocks are currently trading below their peak prices, presenting potential buying opportunities that could amplify returns in the coming decade.
The Trade Desk, which operates in the rapidly expanding digital advertising market expected to exceed $950 billion by 2026, leverages a platform that enhances ad-buying experiences. Selling ad space from various sources rather than its own inventory, The Trade Desk has maintained a remarkable customer retention rate of over 95% for the past 12 years. Recent financial disclosures show the company generated approximately $3 billion in revenue last year from $13 billion in gross spending on its platform, marking an 18% growth from 2024.
Trading at a current price of $24.09, The Trade Desk boasts a market cap of $11 billion and an impressive gross margin of 78.63%. Despite challenges from slow growth in sectors like consumer goods and automotive—which represent a quarter of its overall business—the company is well-positioned for substantial growth as economic conditions improve. Analysts project a double-digit earnings growth trajectory for the company, with its stock trading at a modest 11 times this year’s earnings estimate, indicating potential future growth.
On the other hand, Axon Enterprise is revolutionizing public safety technology by creating an integrated tech platform for law enforcement. Initially known for its Taser devices, Axon has expanded its offerings to include cloud software and AI tools that analyze data collected from body cameras, in-car cameras, and drones. The fourth quarter of last year saw a remarkable 39% year-over-year revenue increase to $797 million, with software revenue soaring 40%.
Currently priced at $495.76, Axon’s market capitalization stands at $40 billion, with a gross margin of 59.65%. Although some investor concerns linger about the impact of AI on its cloud services, the company’s unique ability to collect large volumes of real-world data provides a competitive edge. Bookings from AI-driven products have nearly tripled, exceeding $1 billion, and Axon projects future contracted bookings of over $14 billion.
Furthermore, Axon’s management anticipates annual revenues will reach $6 billion by 2028, supported by an expectation for a 28% adjusted operating margin. Despite trading at a higher forward earnings multiple of 64, the company’s prospects are bright, with analysts forecasting an annualized earnings growth rate of 38%.
Both The Trade Desk and Axon Enterprise exemplify the potential for sizable returns in an investment landscape characterized by innovation and growth. With careful consideration and a long-term investment approach, patient investors could reap substantial rewards from these promising stocks.
