Scrambling to support remote work and tap cloud-computing resources during the coronavirus lockdown, companies depended on IT departments to come to the rescue. The rescue dog was Datadog (DDOG). Companies benefited then, and are now, by relying on Datadog's tools to monitor software applications and networks, writes John Gardner, founder and principal of Blackhawk Wealth Advisors’ Market Insights.
Datadog stock has prospered through the pandemic and beyond. The company's IPO was in September of 2019. Its stock has gained over 225% since the offering, outpacing the near 81% increase in the S&P 500 over the same time.
Since 2010, Datadog’s mission has been to displace larger legacy vendors with a cloud-based monitoring and analytics platform. The company's strong and consistent fundamentals demonstrate its mission is being accomplished. Datadog's three-year earnings compounding annual growth rate (CAGR) is 104%. Its three-year sales CAGR is 60%.
Datadog is now in the right place and time to cash in on artificial intelligence (AI), too. Datadog recently said only about 2.5% of its annual recurring revenue is derived from generative AI companies using its cloud monitoring tools to keep their services up and running. However, the company says its generative AI customer base is growing rapidly.
Datadog stock offers investors great growth potential at a timely entry price, but not without volatility. As with most tech stocks over the last two years, there have been huge price swings with Datadog stock. It swooned in 2022, declining over 58%. In 2023, through early December, it soared over 60%.
DDOG holds the #1 rank in its peer industry group of 127 – Computer Software/Enterprise. I recommend this best-of-class stock a BUY.
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