To find the best growth stocks, I look into the most thriving sectors. More specifically, I’m looking for evolving trends and companies well-positioned to profit from the changing landscape. Growth stocks can transform an investor’s wealth, in my opinion. However, they also carry more risk and the key to success, in my opinion, is to identify them at the right time.
I have previously explored my picks for the growth stocks that could double in 2022. But I’ve spotted another which could be the best growth stock to buy now with as little as £300.
Identifying the best growth stocks
Companies that act quickly and adapt to the changing trends within the sector have greater growth potential, in my experience. Having a competitive advantage over rivals is also very important to sustain long-term growth in an expanding market. With that in mind, when I’m searching for the best growth stocks, I’m looking for two traits in particular:
- Size – Many big companies have the advantage of size which enables them to manage costs of adapting to changing trends. Moreover, for competitors beating a massive company is difficult. Hence, survival and growth rate is much higher.
- Switching cost – High switching costs are extremely beneficial for companies. When the end consumer finds it difficult to switch brands/services it means the company has earned a potentially lifetlong customer.
Mega changes in cloud technologies
Cloud software is becoming a mainstream investment due to new and evolving technologies. Gartner has forecast worldwide end-user spending on public cloud services to rise to $332.3bn in 2021. Furthermore, the pandemic removed all reluctance from users to shift the major workflows from on-premises to the cloud. As a result, the interest in cloud-based software spiked.
Salesforce.com (NYSE:CRM) is a $250bn company that offers the number one customer relationship management (CRM) platform in the world. It provides cloud-based software that streamlines the sales and marketing operations of organisations. Moreover, the rise in the work from home trend increased the demand for Salesforce.com software as it also offers easy access to web-based software.
The primary reason behind the popularity of this cloud software platform is its exceptional service and relatively low cost. The implementation of Salesforce can cost as low as $2,000 for a company. Furthermore, the simplicity and quick implementation timeframe give it an edge and attract more customers. Hence, it is my pick for the best growth stocks to invest in.
Another important reason for the increased popularity of the Salesforce CRM platform is the return it offers to the users on the money spent. This coupled with efficient data management and improved employee-customer engagement, makes it even more desirable. As a result, more and more organisations choose to implement the Salesforce CRM platform within their organisations. This fact gives me confidence that this cloud-based company has excellent growth prospects over the long term. At least, that’s what I think.
Risks of this growth stock to consider
As exciting as this growth opportunity seems to be, it’s not without its risks. Salesforce is far from the only CRM platform out there. And handling sensitive data makes the company a prime target for cyberattacks. Suppose any security flaw is exploited. In that case, it could cause many key customers to change over to a competing system, as well as deter future platform users.
Final thoughts
Handpicking companies within a growing sector is a challenging but worthwhile task. How much return will my £300 investment be worth in the future? Only time will tell. But I believe it could be a lucrative opportunity. That’s why Salesforce is on my best growth stocks to buy list for my portfolio.
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Saima Naveed does not own shares in any of the companies mentioned. The Money Cog has no position in any of the companies mentioned. Views expressed on the companies, assets and strategies mentioned in this article are those of the writer and, therefore, may differ from the opinions of analysts in The Money Cog Premium services.
