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Over the last year, the global economy encountered a number of roadblocks, from supply chain issues to fears about inflation. The stock market suffered as a result. For instance, the growth-oriented Nasdaq Composite index lost 32% during the same time period while the S&P 500 market index has plunged 24% year to far.

But not all boats were lowered by the receding tide. In this challenging year, many businesses have shown remarkable growth, and some of these standout efforts have even resulted in favorable stock returns.

Let’s examine two of the strongest growth stocks for 2022 after that. When circumstances are good again, these companies should be even larger wealth-building champions since they are winners in a challenging market situation.

Paylocity: Creating a vast network of small business customers

Online payroll services professional Paylocity (PCTY -3.32%) is hardly trading higher in 2022.

The business of Paylocity didn’t merely cruise along in recent quarters. It instead skyrocketed. The company’s revenue growth slowed in 2020 but exploded back to life in 2021. Paylocity’s most recent quarterly report showed a 37% year-over-year sales growth, which was the company’s greatest growth spike since 2017.

Paylocity is simultaneously producing strong cash flows and increasing bottom-line profitability. In a quarterly report, this corporation hasn’t produced anything less than a double-digit percentage surprise in the past two years.

Today, there is a considerable demand for the company’s cloud-based applications for processing payroll, monitoring time, recruitment, and employee benefits. Paylocity has a domestic target market of more than 1.3 million firms with 73 million employees thanks to its special success in the market for small and medium-sized businesses. Paylocity is taking market share away from more established competitors like Paychex and Automatic Data Processing in this booming industry.

With 152 times trailing profits and 17 times revenue, this stock is not cheap. With Paylocity, however, you are paying more for a top-notch business with a solid development trajectory in a fascinating sector. In the previous five years, Paylocity’s revenues increased by a compound annual average of 23%; it is anticipated that this growth rate will continue to be in the 20% area for the ensuing five years.

Harmonic: The media streaming guru you’ve never heard of

Consumers may access next-generation streaming media thanks to Harmonic’s technology and services. The business doesn’t compete with suppliers of video-streaming portals like Roku (ROKU -3.56%) or pure-play content platforms like Netflix (NFLX -6.82%). Instead, Harmonic’s solutions are found where the boundaries of conventional media and the streaming industry meet.

For many services that stream live sports, Harmonic, for instance, is a crucial technological supplier. The TV everywhere industry is another area of attention for broadcasters, who aim to make their linear cable/satellite/broadcast programs accessible online as well. Harmonic is useful. Ninety percent of Harmonic’s quarterly revenues come from these two target industries when combined.

You could argue that organizations like Harmonic are at the forefront of the second wave of the media streaming revolution if Netflix and Roku are the first wave. Although it might be challenging to combine user-controlled digital broadcasts with live material, there is obviously a big demand for this type of hybrid media.

In the Software-as-a-Service market, Harmonic is expanding rapidly, with a compound annual growth rate (CAGR) of at least 45% expected over the following three years. The second quarter report from August showed a 39% increase in top line revenue, consistent profit margins, and a large number of new customer wins. With a 62% increase in annual revenue, the cable access sector took the lead.

This is the growth stock for media streaming that you didn’t know you needed. Even in the present growth-stock slump, Harmonic’s ticker has market momentum behind it thanks to the stock’s gains of 13% in 2022 and 52% over the previous year.

Author: Blake Ambrose

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