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3 High-Growth Tech Stocks With More Potential Than Any Cryptocurrency – The Motley Fool

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Cryptocurrency took the market by storm last year, but in 2022 the performance of crypto has been more than disappointing.

Bitcoinstill the biggest of all crypto, is down 56% year-to-date, and Ethereum fell 58%. In addition to the bursting of the bubble in crypto, blockchain-based currencies have yet to provide significant functionality in the world. Perhaps the biggest spectacle to come out of cryptocurrencies so far is the non-fungible token (NFT), but those also turned out to be a bubble.

If you’re looking for investments with truly monster growth potential, keep reading to see three stocks that can outperform any cryptocurrency.

The leader in connected TV

Rokuit is (ROKU 2.25%) this year’s performance has been bad enough to make even crypto investors blush. The stock is down 77% this year and has declined steadily throughout 2022.

The company is simultaneously being hit by a macroeconomic slowdown in ad spending, which digital ad giants love Metaplatforms and Alphabet has just been confirmed, and a badly programmed ramp-up of investments. In the second quarter, Roku’s operating expenses jumped 73%, even though revenue grew only 18%, and the company posted only 3% revenue growth in the third quarter.

A big jump in spending on research and development and sales and marketing was the main reason for the discrepancy, and its GAAP loss of $110.5 million helps explain why the stock fell so sharply.

However, Roku is still the favorite for connected TV, the ad-based streaming format that is gradually replacing linear TV. Active accounts continue to grow, reaching 63.1 million in the second quarter, and the company typically claims a third of streaming partner ad revenue in its app.

This presents a huge opportunity for the future, especially as streaming leaders like netflix and disney are preparing to launch their own ad levels. The title will be challenged as macro headwinds in the ad market persist, which could last at least a few quarters, but it’s on track to become the dominant next-gen television. That would make it worth far more than the $7 billion market cap it is valued at today.

A broad approach in e-commerce

Like Roku, Etsy (ETSY -2.64%) has struggled this year due to the e-commerce overhang. After the boom in online shopping in 2020 and 2021, people took a break this year, spending instead in physical stores and on services like travel and restaurants.

The stock is down 54% year-to-date, and the company actually reported a slight decline in gross merchandise sales in the second quarter, showing that spending on the platform has fallen.

However, there are a number of reasons why the company still has a lot of growth ahead of it.

Etsy has carved out a unique niche in e-commerce, with a network of 7 million independent sellers making one-of-a-kind handicrafts and selling vintage gear like clothing. If you’re looking for a unique product on the internet, Etsy is the go-to destination. The brand is also adapting well to the age of remote working and millennial culture, as this generation has expressed a preference for authenticity when shopping.

Management extended its strategy to other e-commerce platforms, acquiring Reverb, a musical instrument marketplace, Depop, a vintage and second-hand clothing marketplace, and Elo7, a similar company to Etsy, based in Brazil.

These marketplaces provide the company with opportunities to grow beyond Etsy.com, and the stock and overall activity should recover as the macroeconomic climate improves and Etsy ends tough comparisons from 2021. The business is highly profitable, with adjusted EBITDA margins at the 25% to 30% range.

A software company focused on a huge market

Okta (OKTA -2.00%) is best known as a maker of cloud identity software, and the company offers the most comprehensive suite in the industry. It helps companies enable their employees and customers to connect and stay connected seamlessly and securely.

Like other software stocks, Okta shares have fallen sharply this year, down 75%.

In its latest earnings report, the company acknowledged that it encountered challenges integrating Auth0, the customer identity software company it acquired last May, leading it to recall his advices. Due to this and macroeconomic headwinds, the company also pulled back from its target of $4 billion in revenue and $800 million in free cash flow for fiscal 2026.

However, the company is taking steps to replace the salespeople it lost in the onboarding and train them. He also said there was some confusion among customers and his sales force as to which product, Okta or Auth0, to sell to which customers. The company solved this problem by using the Okta customer identity as an add-on for the workforce identity. For new customers, it will launch Auth0.

Looking ahead, Okta still has a huge growth opportunity ahead of it. It is targeting an $80 billion addressable market in identity access management, which compares to its revenue of less than $2 billion a year today. The company has also grown revenue by at least 36% every quarter since its IPO in 2017, and it has pledged to control costs in the second half to improve profitability.

With its market cap now below $10 billion, Okta could easily be a multi-bag stock if it capitalizes on the growth opportunity before it.

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