Seismic changes in global economies and the stock market are forcing investors to look at new ways to find companies that can add value long term, over multiple years, by adapting to these economic and market upheavals.
To this end, The Boston Consulting Group (BCG) and Fortune magazine created the Fortune Future 50, “the global companies with the best prospects for future growth.” The pair use a proprietary system to analyze companies using various factors to identify those with the best long-term growth potential.
Cumulative shareholder Return of the stocks on the Fortune Future 50 list in 2019, compared to 21% for the S&P 500 over the same period.
5 Stocks Expected to Crush the S&P 500
The top five names on Fortune Future 50’s list include ServiceNow (NOW), Veeva Systems (VEEV), Atlassian (TEAM), Workday (WDAY), and Splunk (SPLK).
ServiceNow is an enterprise software company, focusing on digital workflows. The company has a market cap of just over $100 billion market cap and generated $4.2 billion in revenue over the last twelve months. The company has over 10,000 employees and its stock is up almost 70% over the last years.
Fortune highlights ServiceNow’s NBA and WNBA partnerships as highlights for the company and its ability to grow revenues amid the coronavirus pandemic. The company CEO is Bill McDermott, who was also the previous CEO of the German software giant SAP. The company also ranks fourth on Fortune’s list of World’s Most Admired Companies.
Veeva Systems (VEEV)
Veeva Systems is a cloud computing company in the life sciences space. This near $43 billion market cap company helps certain health care companies manage clinical trials and regulatory submissions. It calls the likes of Pfizer (PFE) and GSK (GSK) customers. The company has generated almost $1.3 billion in revenue over the last twelve months. The company is 15th on Fortune’s list of Fastest Growing Companies.
Atlassian is one of Fortune’s top 100 for Best Companies. The company has generated $1.71 billion in revenue over the last twelve months. The Sydney, Australia, based company is a maker of software tools, including Jira and Trello. The company’s outstanding bonds have hampered earnings, notes Fortune.
Workday has 12,200 employees and makes Fortune’s list of World’s Most Admired Companies and on the Best Companies list, ranking fifth on both. The company has generated nearly $4.2 billion over the last twelve months. Workday is a major player when it comes to cloud-based programs for financial planning and human resource management. In terms of future growth, the company is looking to tap into the employee placement market, which includes helping companies connect with displaced workers.
Splunk focuses on big data. The company, which has 5,800 employees, helps companies understand and utilize big data. The majority of the Fortune 100 companies are Splunk customers. The company has generated over $2.3 billion over the last twelve months. As the use of data and artificial intelligence rise, the demand for Splunk’s products and services will only rise.
Significance for Investors
Noting that rapid technological change is producing an accelerated rate of competition, BCG finds that “for large companies, there is now less correlation than there used to be between past and future financial and competitive performance over multiple years.”
Every successful business starts with an act of imagination. But the most innovative companies are those that continually reimagine their potential—even if it means embracing radical shifts in strategy. That relentless focus on the future typically pays off handsomely for investors.
Three years ago, Fortune teamed up with management consulting firm BCG to create the Future 50, using a proprietary system that analyzes dozens of factors to identify companies with the best long-term growth potential. The 50 companies on last year’s list produced a cumulative shareholder return of 71% since publication vs. 21% for the S&P 500 over the same span. The Future 50 list is dominated by companies headquartered in the U.S. Among the five listed above, all but Atlassian are based in the U.S.