Stock markets are soaring, with the Standard & Poor's 500 index and Dow Jones industrial average up 19% and 24%, respectively, since the beginning of 2017 and repeatedly reaching record highs, breaking them and setting new records throughout the year.
But several publicly traded technology and services providers in the real estate and mortgage industries are expected to grow even faster in 2018 than they did in 2017, according to analysts at investment bank William Blair.
The positive outlook reflects a variety of strategies to enhance top line (revenue) and bottom line (profit) growth, but generally suggests more rapid organic growth for industry vendors, rather than growth driven by mergers and acquisitions activity.
And shareholders are likely to reward this performance boost with higher stock prices, given the importance of growth and visibility on cash flows to investors, the analysts wrote in a recent report.
"We believe some of this is already anticipated in valuations given where market and individual stock multiples are, but we also believe the optics of acceleration and the extrapolation onto 2019 numbers should serve as tailwinds for the stocks in this report," said William Blair's Brandon Dobell and Josh Lamers.
Some companies, like technology developer Ellie Mae, are expected to see accelerated growth driven by easier market conditions, replacement of lost contract revenue and the ramp-up of new customers.
Others, like Remax, should see modest acceleration from growing contributions from agents in territories acquired since late 2016, along with increased traction with the Motto Mortgage franchise
bringing in sales and growth in monthly fee revenue.
By comparison, a number of commercial services firms and high-growth enterprises that may see their growth rates stagnate or even slow down in 2018 unless the companies can execute notable merger and acquisition transactions in the next several months.
Here's a look at the seven companies William Blair expects to perform well in 2018. The report is based on analysis of publicly traded firms in the firm's universe of real estate services and technology companies that it covers and does not include every public company in the real estate and mortgage industries. Stock prices and market capitalizations are based on the company's closing price on Dec. 12.