3 Explosive Growth Stocks With Outstanding Management Teams

When searching for the best opportunities in the market, hard variables such as revenue growth and profit margins are obviously very important. However, the most crucial return driver for a company over the long term is arguably the quality of the management team.

Businesses are built and run by people, after all, and investing in the right people can lead you to investing in companies that can sustain rapid growth rates for much longer than the market expects, which has huge implications in terms of potential returns.

In simple terms, the current price of a stock is reflecting a particular set of expectations about the business going forward. If the company can exceed those expectations by a large margin, the stock price will need to increase in order to reflect this new reality.

A visionary management team with a long-term horizon and an innovative culture can build multiple growth engines for a business over the years, and this can produce exponential returns for investors in those companies.

Salesforce.com (CRM), MercadoLibre (MELI), and Livongo Health (LVGO) are three high-growth companies being led by outstanding management teams and offering plenty of opportunities for further expansion in the years ahead.

Salesforce.com

Software-as-a-service is perhaps the most attractive business model around, and many of the most explosive growth stories in the market are coming from this industry in recent years. Demand for all kinds of software is booming, and companies in the sector enjoy tremendous customer loyalty because those customers are remarkably reluctant to change suppliers or to reduce their investments in mission-critical technologies.

This provides for a rare combination of sustained growth and recurrent revenue, which is very hard to find in other industries. Besides, the cost of providing the software is relatively stable in comparison to revenue, and this produces expanding gross profit margin as revenue grows over time.

Salesforce.com pioneered the software-as-service business model under the leadership of founder and CEO Marc Benioff, who founded the company in 1999. Benioff has exhibited a talent for business since he was very young; while in high school, he sold his first app to a computer magazine for $75.

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Disclosure: I am/we are long MELI, LVGO, CRM. I wrote this article myself, and it expresses my own opinions. 

Disclaimer: I wrote this article myself, and it expresses my own ...

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