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Shares of The Trade Desk (TTD) rallied hard earlier this month after it posted better-than-expected fourth-quarter 2023 revenue (up 23% year over year) and strong forward guidance. The programmatic advertising platform provider credited the gravitation of advertisers to connected TV and retail media channels, and echoed a rebound in the broader digital advertising market that’s expected to continue for at least the next several quarters.

In the meantime, The Trade Desk has already achieved sustained GAAP profitability and is generating positive cash flows, leaving its board comfortable bolstering the company’s share repurchase authorization by $647 million (repurchases last quarter were $220 million), bringing its total remaining authorization to $700 million. That’s a healthy chunk of its outstanding shares considering TTD’s market cap stands at just below $40 billion as of this writing.

With shares having given up about half their post-earnings gains over the past two weeks, I think patient, long-term shareholders would do well to open or add a position at these levels.

Cloud observability platform Datadog, Inc. (NASDAQ: DDOG) have pulled back modestly over the past couple weeks, namely as investors weighed the contrast between the company’s strong quarterly results and its seemingly conservative forward outlook.

On the former, Datadog’s quarterly revenue rose 26% year over year to just under $590 million, and — similar to Trade Desk — translated to GAAP net income of $0.15 per share (swinging from a $0.09-per-share loss a year earlier). Datadog also converted more than a third of that revenue to free cash flow ($201.3 million), demonstrating impressive operating leverage at scale.

But the market was less impressed by Datadog’s forward guidance calling for full-year 2024 revenue to rise “just” 20.4% from 2023 at the midpoint (consensus estimates wanted growth of around 22.8%).

Given Datadog’s propensity for underpromising and overdelivering, however, I think the resulting drop will prove to be a solid buying opportunity.

As more businesses strive to maximize their search engine optimization (SEO) efforts, I think online visibility platform management leader Semrush Holdings, Inc. (NYSE: SEMR) will prove a diamond in the rough.

Semrush has set to release fourth-quarter results early next month (on Mar. 5, 2024), but appears undervalued with significant growth potential. Revenue last quarter climbed 20% year over year, fueled a by combination of an increase in paying customer count (up 14% year over year to 106,800) and a healthy dollar-based net retention rate of 109% — indicating existing customers are continuing to spend more after their first years on the Semrush platform. And noting I love a good operating-leverage story, Semrush also swung to net income positivity (both on a GAAP and non-GAAP basis) last quarter. Current guidance calls for Q4 revenue to climb around 21% year over year to $83.2 million at the midpoint, with continued (adjusted) profitability.

Over the longer term, Semrush estimates its global opportunity to be worth more than $20 billion, leaving this <$2 billion business a long, steadily expanding runway for growth.

The Trade Desk, Datadog, and Semrush represent compelling opportunities for investors seeking growth stocks with strong market presence and potential for substantial returns. These companies, each with a unique edge in their technological domains and enjoying substantial operating leverage at scale, provide a diversified investment approach in the dynamic sectors of digital ads, cloud services, and online visibility management. As the tech landscape continues to evolve, keeping an eye on these innovators should continue to drive outside gains.

• BLI Premium performance update: As of this writing, the BLI Premium Portfolio is up 12.12%, beating the S&P 500 since launch by 5.84%:

• New trade recap: In case you missed it, on Friday we added a 2% position in one new stock to the BLI Premium Portfolio — a young tech company I believe has massive long-term potential. BLI Premium Members can read more about the newest BLI Premium Portfolio stock here!

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