2 Stocks That Look Just Like eBay in 1998

Buying and holding shares in great companies like eBay for the long haul has proven to be very profit-friendly, but identifying growth stocks early on isn't easy. To help find tomorrow's winners, we asked two Motley Fool investors which burgeoning growth stocks are on their radar right now. They responded with Skechers (NYSE: SKX) and Mimecast (NASDAQ: MIME). Read on to find out if these stocks deserve a spot in your portfolio.

A shoe company with solid prospects

Tim Green (Skechers): Footwear company Skechers is admittedly much further along than eBay was in 1998. The company generates more than $4 billion of revenue annually and it's valued at nearly $7 billion. But don't let its size fool you -- Skechers can continue to grow at a robust pace for years to come.

Skechers' big opportunity is outside of the United States. The international business has been booming, with international wholesale revenue up 21.9% in 2017 and comparable sales at the company's international retail stores up 10.1%. The domestic business isn't as impressive, but it's still performing well. Domestic wholesale revenue jumped 4.1% last year, while domestic comparable retail sales grew 6.4%.

Growth may slow down as Skechers gets bigger, but it's still a lot smaller than the big dogs of the industry. Nike, for example, generated $16.1 billion from footwear globally in the nine months ending in February. Despite its size, Skechers still is only scratching the surface of the global footwear industry.

Just because Skechers has room to get bigger doesn't mean it will succeed. Plenty can go wrong, including style missteps and frosty trade relations that could stunt its international growth. But if Skechers plays its cards right, it has the opportunity to grow into a much larger company in the coming years.

Whaling, ransomware, and clouds

Todd Campbell (Mimecast): Threats to email security are getting increasingly sophisticated, but the need to protect against threats, such as whaling and ransomware, is only one reason why cyber-security company Mimecast is enjoying strong enough tailwinds for me to make this stock a Motley Fool CAPS pick last month.

In addition to cybersecurity solutions such as email monitoring, Mimecast protects companies against outages if their cloud-based servers go down and it creates duplicate email archives to address companies' compliance and email discovery demands.

As companies shift their email to the cloud, their demand for Mimecast's solutions has grown. Last quarter, Mimecast reported that Office 365 customers are spending more than non-Office 365 customers and as a result, the company's average customer bought 2.9 services last quarter, up from 2.8 services in fiscal Q2. As of December, nearly one-third of its customers were subscribing to four or more of its services.

Coming into 2018, Mimecast was working with 29,200 customers, including 1,100 new customers that it added in fiscal Q3. That 1,100 was 200 more new relationships than it had added in fiscal Q2 and frankly, I think that's only scratching the surface.

The increase in business helped Mimecast's revenue reach $67 million in fiscal Q3, up 39%, and if I'm right that demand for its services will continue to increase from here, then its revenue in five to ten years should be multiples of that amount.

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Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool’s board of directors. LinkedIn is owned by Microsoft. Timothy Green owns shares of Skechers. Todd Campbell owns shares of Microsoft. The Motley Fool owns shares of and recommends Skechers. The Motley Fool has a disclosure policy.