The current economic data shows inflation is running hot, supply chains are strained, and consumers are increasingly uncertain. A company that can thrive and grow now is one that’s going to be rewarded by investors in today’s market.
The best place to find such companies are one that offer a powerful brand, which tends to hold more value, or which offer a service, as services are removed from supply chain constraints and tend to be highly profitable.
One such area that looks ripe for continued growth is in security software plays. It’s clear from earnings season that companies like Datadog (DDOG) are in a growing space with room for further expansion.
The company reported results last week showing that revenue surged 84 percent compared to the same quarter a year prior, and the company even moved to profitability, earning 11 cents per share.
Shares are up nearly 38 percent over the past year, but are still under a peak set back in November before the overall market started its current correction.
Action to take: The company’s revenue growth is accelerating, a good sign that shares can make a new high soon, even in the current struggling market. While the company won’t pay investors a dividend, its has room for more growth as it moves to more consistent profitability in the coming quarters.
For traders, the April $190 calls, last going for about $9.80, stand to deliver further mid-to-high double-digit returns in the next few months. Traders may want to look at taking profits if the options move in-the-money.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.