Choosing the appropriate stocks to buy is more important than ever in today’s changing financial environment. Investors are looking for development and stability; therefore, it’s critical to comprehend the prospects and fundamentals of businesses that might experience big rallies in 2024. These three equities are noteworthy because they represent strategic advantages in their respective industries and outstanding financial results.
Each company offers distinct strengths that appeal to different market segments, from remarkable revenue growth and high gross margins in cybersecurity to solid diversification across financial services and technology platforms to unmatched user expansion and revenue streams in digital media.
Exploration of the fundamentals behind these businesses reveals the foundation for their present achievements and projects their future development potential. Understanding the reasons behind these stocks’ imminent surge may help investors, regardless of their experience level, make wise choices and maximize their investment portfolio.
SentinelOne (S)
SentinelOne (NYSE:S) leads in cybersecurity solutions with AI capabilities. In Q1 fiscal 2025, the company’s top-line was boosted by 40% year-over-year (YOY), now totaling $186 million. With its intelligent cybersecurity solutions, the company can attract new clients and retain its current clientele, which benefits the long-term revenue growth rate.
Additionally, the revenue expansion does not rely on a single region. Geographically, its top-line is evenly distributed. The revenue from overseas markets increased by 44% YOY and accounted for 37% of the total revenue for the quarter. SentinelOne’s international growth reflects its market penetration worldwide and its fundamental capacity to meet client demands in various geographical areas.
Moreover, SentinelOne’s Q1 gross margin of 79% was a record high. This represents a vital increase over prior quarters and signifies the company’s scalable business model. As revenue rises, this enables effective operations and the possibility of more bottom-line uplift.
Overall, SentinelOne’s inclusion on the stocks to buy list stems from its solid revenue growth, solid international market expansion and impressive gross margins.
SoFi (SOFI)
SoFi (NASDAQ:SOFI) is a financial technology company that offers lending, investing and personal finance products. The business has incredible strength in expanding and changing its top-line configuration. With adjusted net revenue of $581 million in Q1 2024, SoFi derived a solid 26% YOY boost.
Considering this is the 12th straight quarter of an increase above 25%, the stable top-line boom is decisive. The Financial Services and Technology Platform sectors contributed 42% of the adjusted net revenue in Q1 2024, up from 40% in the previous quarter and 33% in Q1 2023. Hence, this further highlights the vital diversification of revenue streams.
Indeed, this shift in top-line diversity is a strategic move to attain a 50:50 split in the revenue mix by the end of 2024. At the bottom-line, in Q1, SoFi’s adjusted EBITDA increased to $144 million, a 91% YOY uplift. Due to this increase, the EBITDA margin increased from 16% to 25%. Thus, the expanded margin demonstrates SoFi’s fundamental capacity to take advantage of scale.
To sum up, SoFi stands out among stocks to buy due to its constant top-line growth and strategic diversification across financial services and technology platforms.
Spotify (SPOT)
Spotify (NYSE:SPOT) dominates the digital media industry, as it has a massive streaming platform for music, podcasts and audiobooks. In Q1 2024, The company derived a 19% increase YOY in total monthly active users (MAU). There were 13 million net additions to the MAUs over Q4 2023. The MAU performance is in line with that of 2021 and 2022. With that, Spotify added 3 million net new users in the quarter. Looking forward, the company may hit 631 million MAU for Q2, up 16 million from Q1, and 245 million subscribers, up 6 million. Fundamentally, Spotify can draw in new users and keep existing ones, supporting the potential for rapid growth.
Further, Q1 saw a 21% YOY increase in total revenue (constant currency basis), indicating a 1% increase in growth over Q4 2023. Both premium and ad-supported income streams led to the top-line growth. The uplift in average revenue per user (ARPU) and subscriber growth boosted premium revenue by 20% YOY. Moreover, revenue from advertising also increased considerably by 18% YOY. To conclude, Spotify is on the stocks to buy list due to its solid user growth metrics and top-line.
As of this writing, Yiannis Zourmpanos held a long position in SOFI. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor held a LONG position in SOFI.