Best Technology Stocks for 2022

My Top 3 Tech Stocks: JFrog ($FROG): JFrog is a “Liquid Software”, which essentially means that it is “version-less”, meaning that it always stays up to date due to incremental improvements. JFrog’s platform acts as a bridge between software development and deployment, enabling organizations to build/release software faster and more securely. JFrog has many different types of products that they offer to their customers, both at an enterprise and customer level. JFrog has noted that Software delivery has evolved exponentially since the 1990’s, which has made it increasingly chaotic to manage. This is the problem that JFrog has set out to fix, which will increase the speed, security, and efficiency of software delivery. A reasonable person would probably be thinking, “well this is all well and good, but is JFrog actually good and trusted?”. Well, JFrog has partnered with DevOPs vendors (such as GitHub, GitLab, and Sonatype), cloud providers (AWS, Google Cloud, and Azure), and Diversified Vendors (IBM, RedHat, VMWare, and Pivotal) in order to extend their product and product offerings to the largest possible audience. Furthermore, if this wasn’t enough 85% of fortune 100 companies use one or more of JFrog’s product offerings (companies like Google, Microsoft, Qualcomm, Visa, Morgan Stanley, HP, Blizzard, T-Mobile and many more), and 31% of the Global 2000 companies have opted for 1 or more of JFrog’s offerings. The fact that JFrog’s products are trusted and used by these large companies speaks volumes about their effectiveness and security. In terms of their growth, and prospect for 2022, JFog grew their revenues by 37% between 2020-2021, and they expect that their revenues are going to grow by 33% in 2022. Furthermore, in 2021 JFrog was able to increase their gross profit margin to 84.1% (from 82.4% in 2020), and their gross margin as of Q4 2021 was 84.8% (which signals that it is still growing). Alternatively, JFrogs Free Cash Flow margin decreased to 11.5% (from 17.2%), which is unfavourable. However, in Q4 2021, their FCF margin was at 28.1%. Lastly, JFrog was able to grow their enterprise customers who spend over $100,000 annually, increased by 53% to 537 (from 352). In the long term, JFrog plans to have their gross margin at 80% (currently 84%), their operating margin at 23% (currently 2%), and their Free Cash Flow margin at 30% (currently 11%). If you are inteersted in reading my full-length analysis on JFrog, you can do so here  Alteryx ($AYX): Alteryx is a platform for data analysts/scientists worldwide. Alteryx provides automation software for data analysis, which creates visual workflows/analytic processes. Alteryx has various product offerings that specializes in certain areas of data analysis/science. Alteryx estimates that there are 60B hours wasted every year on manual work in spreadsheets. This inefficiency is the problem that Alteryx has set out to solve. Alteryx combines data, processes and people, and automates data-driven processes in order to decrease the time wasted by manual analysis. Alteryx has over 7,700 customers across all industries, who are using their product in order to achieve different goals (growth, return, efficiency, risk reduction etc.). Some of their most notable customers include AWS, Chevron, Kraft-Heinz, Kellogg’s, P&G, Unilever, Audi, Visa, Netflix, Facebook, Samsung and many more. Alteryx has helped their customers achieve various feats, such as: $1.5B sales increase, $20M in annual savings, $80M addition to their bottom line, 99.4% on-time delivery rate, and a 757% increase in efficiency. As you can see, there are various ways that Alteryx can help add value to their customers, which will help them to keep their customer retention rates very high in the future. Alteryx has noted 5 drivers of growth, which are: Expanding enterprise sales, international expansion, community expansion, new product offerings, and creating a Partner & Channel ecosystem. Lastly Alteryx has the following long term margin goals: gross margin to be 80-85% (currently 93%), Operating margin to be 25-30% (currently 16%), and their free cash flow margin to be 20-25% (currently 10%). Adobe ($ADBE): Adobe Is a software company that sells their products to customers worldwide. Adobe has 3 main business segments, which include: Digital Media, Digital Experience, and Publishing & Advertising. Adobe has a bright future ahead of them in terms of growth as individuals become increasingly creative in the digital worlds (creating content (videos, photos etc.), art (Digital art, NFT’s etc.), and others), and as businesses are becoming increasingly digital/personalized. These 2 segments of growth can be capitalized on through Adobe’s creative cloud (photoshop, aftereffects, etc.), and through Adobe’s document cloud and experience cloud. Not only have I noticed this but Adobe has too, noting digital content, social content, 3-D immersive, metaverse development, digitization, and creativity all being factors that fuel growth. Adobe has estimated that their TAM will grow at 42% annually until 2024, at which their TAM will be $63B. Furthermore, Adobe is forecasting that API’s, Machine Learning, AI, and modernizing document workflows will drive growth in their Document cloud TAM. Adobe is forecasting their Document Cloud TAM to increase at a 62% CAGR from 2021 levels of $7.5B to $32B by 2024. Lastly, Adobe is expecting their Experience cloud TAM to increase by 15.7% annually from 2021 levels of 71B to a TAM of 110B by 2024. Overall, Adobe is forecasting a TAM increase from 2021 levels of $100B, to $205B by 2024. This would represent an annual growth rate of 27%.

Best Technology Stocks for 2022

Jack Dalton

12:14 PM

Newsletter

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Image credit: UTradea

My Top 3 Tech Stocks:

JFrog ($FROG):

JFrog is a “Liquid Software”, which essentially means that it is “version-less”, meaning that it always stays up to date due to incremental improvements. JFrog's platform acts as a bridge between software development and deployment, enabling organizations to build/release software faster and more securely. JFrog has many different types of products that they offer to their customers, both at an enterprise and customer level.

JFrog has noted that Software delivery has evolved exponentially since the 1990's, which has made it increasingly chaotic to manage. This is the problem that JFrog has set out to fix, which will increase the speed, security, and efficiency of software delivery.

A reasonable person would probably be thinking, “well this is all well and good, but is JFrog actually good and trusted?”. Well, JFrog has partnered with DevOPs vendors (such as GitHub, GitLab, and Sonatype), cloud providers (AWS, Google Cloud, and Azure), and Diversified Vendors (IBM, RedHat, VMWare, and Pivotal) in order to extend their product and product offerings to the largest possible audience.

Furthermore, if this wasn't enough 85% of fortune 100 companies use one or more of JFrog's product offerings (companies like Google, Microsoft, Qualcomm, Visa, Morgan Stanley, HP, Blizzard, T-Mobile and many more), and 31% of the Global 2000 companies have opted for 1 or more of JFrog's offerings. The fact that JFrog's products are trusted and used by these large companies speaks volumes about their effectiveness and security.

In terms of their growth, and prospect for 2022, JFog grew their revenues by 37% between 2020-2021, and they expect that their revenues are going to grow by 33% in 2022. Furthermore, in 2021 JFrog was able to increase their gross profit margin to 84.1% (from 82.4% in 2020), and their gross margin as of Q4 2021 was 84.8% (which signals that it is still growing). Alternatively, JFrogs Free Cash Flow margin decreased to 11.5% (from 17.2%), which is unfavourable. However, in Q4 2021, their FCF margin was at 28.1%. Lastly, JFrog was able to grow their enterprise customers who spend over $100,000 annually, increased by 53% to 537 (from 352).

In the long term, JFrog plans to have their gross margin at 80% (currently 84%), their operating margin at 23% (currently 2%), and their Free Cash Flow margin at 30% (currently 11%). If you are inteersted in reading my full-length analysis on JFrog, you can do so here

Alteryx ($AYX):

Alteryx is a platform for data analysts/scientists worldwide. Alteryx provides automation software for data analysis, which creates visual workflows/analytic processes. Alteryx has various product offerings that specializes in certain areas of data analysis/science.

Alteryx estimates that there are 60B hours wasted every year on manual work in spreadsheets. This inefficiency is the problem that Alteryx has set out to solve. Alteryx combines data, processes and people, and automates data-driven processes in order to decrease the time wasted by manual analysis.

Alteryx has over 7,700 customers across all industries, who are using their product in order to achieve different goals (growth, return, efficiency, risk reduction etc.). Some of their most notable customers include AWS, Chevron, Kraft-Heinz, Kellogg's, P&G, Unilever, Audi, Visa, Netflix, Facebook, Samsung and many more.

Alteryx has helped their customers achieve various feats, such as: $1.5B sales increase, $20M in annual savings, $80M addition to their bottom line, 99.4% on-time delivery rate, and a 757% increase in efficiency. As you can see, there are various ways that Alteryx can help add value to their customers, which will help them to keep their customer retention rates very high in the future.

Alteryx has noted 5 drivers of growth, which are: Expanding enterprise sales, international expansion, community expansion, new product offerings, and creating a Partner & Channel ecosystem. Lastly Alteryx has the following long term margin goals: gross margin to be 80-85% (currently 93%), Operating margin to be 25-30% (currently 16%), and their free cash flow margin to be 20-25% (currently 10%).

Adobe ($ADBE):

Adobe Is a software company that sells their products to customers worldwide. Adobe has 3 main business segments, which include: Digital Media, Digital Experience, and Publishing & Advertising.

Adobe has a bright future ahead of them in terms of growth as individuals become increasingly creative in the digital worlds (creating content (videos, photos etc.), art (Digital art, NFT's etc.), and others), and as businesses are becoming increasingly digital/personalized. These 2 segments of growth can be capitalized on through Adobe's creative cloud (photoshop, aftereffects, etc.), and through Adobe's document cloud and experience cloud. Not only have I noticed this but Adobe has too, noting digital content, social content, 3-D immersive, metaverse development, digitization, and creativity all being factors that fuel growth. Adobe has estimated that their TAM will grow at 42% annually until 2024, at which their TAM will be $63B.

Furthermore, Adobe is forecasting that API's, Machine Learning, AI, and modernizing document workflows will drive growth in their Document cloud TAM. Adobe is forecasting their Document Cloud TAM to increase at a 62% CAGR from 2021 levels of $7.5B to $32B by 2024. Lastly, Adobe is expecting their Experience cloud TAM to increase by 15.7% annually from 2021 levels of 71B to a TAM of 110B by 2024.

Overall, Adobe is forecasting a TAM increase from 2021 levels of $100B, to $205B by 2024. This would represent an annual growth rate of 27%.