From emerging startups to established giants, the tech landscape is ablaze with disruptive forces. Metrics suggest that the digital transformation market could explode from $2.71 trillion in 2024 to a staggering $12.35 trillion by 2032. Thus, identifying the pioneers driving this change is crucial for investors seeking substantial growth. However, discerning true disruptive potential from mere hype remains a critical challenge.
Let’s identify three game-changing stocks. Each are strategically positioned to capitalize on this transformative wave and generate long-term value for investors.
GitLab (GTLB)
Topping our list of game-changing stocks is GitLab (NASDAQ:GTLB). This software developer offers a comprehensive DevSecOps platform, streamlining the entire software development lifecycle to deploy software efficiently.
Management of the software development company has recently reported impressive fourth quarter and full year 2024 financial results. Quarterly revenue surged 33% year-over-year (YOY) to $163.8 million. Net income showed significant improvement, reaching $13.2 million, compared to a loss of $13.8 million in the prior-year quarter.
Further solidifying its commitment to software security, GitLab announced the acquisition of Oxeye on March 20, 2024. Oxeye, which provides cloud-native application security and risk management solutions, will likely accelerate GitLab’s Static Application Security Testing (SAST) roadmap. In addition, Oxeye’s capabilities could augment GitLab’s software composition analysis and compliance tools.
Despite its strong fundamentals, GTLB stock has underperformed the broader market, declining almost 6% year-to-date (YTD). We should highlight that shares are trading at a premium valuation of about 15 times sales. Yet, Wall Street remains bullish, with a median 12-month price target of $75.00, implying a potential upside of 30% from current levels.
Synopsys (SNPS)
Synopsys (NASDAQ:SNPS) emerges as another disruptive force on our list. A pioneer in Electronic Design Automation (EDA), Synopsys shapes the future of “Smart Everything” with cutting-edge software products and consulting services. From self-driving cars to secure communication networks, Synopsys is making its mark.
The tech company has recently delivered solid results for its first quarter of fiscal year 2024, exceeding analyst expectations. Quarterly revenue surged 21% YOY to $1.65 billion, while adjusted earnings per diluted share of $3.56 came in above guidance. Investors’ have been pleased with Synopsys’ strong market position, sending the SNPS stock up 10% YTD,
Earlier in 2024, Synopsys announced a definitive agreement to acquire Ansys (NASDAQ:ANSS). This merger is expected to create a leading force in silicon-to-systems design solutions, bringing together Synopsys’ EDA tools with Ansys’ broad simulation and analysis portfolio.
Analysts have a 12-month price target of $639 for SNPS, suggesting an additional 14% upside from current levels. But the company is richly valued with a forward price-to-earnings (P/E) ratio of 43.1 and price-to-sales (P/S) ratio is of 14.
ALPS Disruptive Technologies ETF (DTEC)
Rounding out our list of disruptive forces is the ALPS Disruptive Technologies ETF (NYSEARCA:DTEC). Launched in December 2017, this thematic fund grants investors exposure to companies using disruptive technologies.
DTEC has diversified portfolio of 95 stocks, while the top 10 holdings constitute 12% of $99.3 million in total assets. Leading names include Hong Kong-based Xinyi Solar Holdings (OTCMKTS:XISHY), Align Technology (NASDAQ:ALGN), Dexcom (NASDAQ:DXCM), First Solar (NASDAQ:FSLR) and PayPal (NASDAQ:PYPL).
The sector breakdown of DTEC includes clean energy & smart grid (10.58%), healthcare innovation (10.31%) and cybersecurity (10.17%). Geographically, the fund leans toward U.S. companies (65.91%), while maintaining exposure to China (5.38%) and Japan (4.72%). Such a diversification enhances DTEC’s ability to capture growth opportunities across various sectors and regions.
So far in 2024, the fund’s performance has been flat. Its trailing P/E ratio of 35.6 reflects the growth potential of the holdings. Finally, interested investors should note the expense ratio of 0.5%.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Tezcan Gecgil, PhD, began contributing to InvestorPlace in 2018. She brings over 20 years of experience in the U.S. and U.K. and has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Publicly, she has contributed to investing.com and the U.K. website of The Motley Fool.