Small businesses are very sensitive to the state of the economy. They are closely linked to local communities and, consequently, do not have the level of capital access, scale or access that large corporations have. So when the economy fluctuates, they often suffer first. Conversely, when times are good, we tend to see new business start-ups.

While it is not always possible to buy shares in small businesses, there are large companies whose success is directly related to the overall health of these businesses. For example, Intuition (NASDAQ: INTU) and More Books You searched for – (NYSE: BILL) Provide software to small and medium-sized enterprises to make accounting և office activities more manageable.

Both have reported strong earnings for the year, suggesting that small businesses are thriving in the current economic climate.

Online accounting is accelerating in Intuition

Having a full-time accountant is not cost-effective for most small businesses. Intuition owns Quickbooks, an affordable accounting software that helps keep millions of entrepreneurs away from the accountant’s office, focusing on what they do best. The program can automate transaction reconciliation, generate invoices, and manage cash flow.

Image source: Getty Images

Intuit also has a thriving consumer business with its TurboTax software, which helps individuals and families process their tax returns. In addition, it opened up a whole new revenue stream through the acquisition of Credit Karma, which provides consumers with free credit reports for their data.

But it’s the small, self-employed segment of the business that brings in the most revenue, և it և grows the fastest.

Intuition section

Financial 2020 revenues

Financial income for 2021

Growth:

Small business

$ 4.05 billion

$ 4.68 billion

16%

Consumer

$ 3.13 billion

$ 3.56 billion

14%

Data source: Company registrations. Intuitive 2021 fiscal year ended on July 31.

The company had other revenue of $ 1.38 billion, including $ 865 million from Credit Karma.

It is noteworthy that the growth of revenues of the Quickbooks online accounting sub-area exceeded the overall growth. This part of the business includes accounting products, which are the most common for small businesses, so its main income may mean that more people have taken ownership in the last 12 months.

Intuition subsection

Financial 2020 income

Financial income in 2021

Growth:

Quickbooks online accounting

$ 1.35 billion

$ 1.69 billion

25.4%

Data source: Company registrations

Intuit traded up $ 9.74 a share in non-GAAP earnings for its fiscal year 2021, which ended July 31, up 23.9% from fiscal year 2020. For Intuit, a non-GAAP result is a more useful tool than a GAAP score because the company had significant one-time costs. The use of non-GAAP results allows the company to exclude these recurring costs, which in this case gives a clearer picture of its overall performance.

The stock was trading at $ 552 at the close of trading on Thursday, with the stock trading at 2021 fiscal 2021. It looks more expensive than the wider Nasdaq 100, which trades at an average P / E ratio of 35. However, there is no better way to play small business returns. If you are optimistic about the economy in the long run, Intuit is a great bet.

Bill.com has provided an explosive guide

Bill.com is the ultimate payment management platform for businesses և it’s embedded in the cloud, so its customers can operate from anywhere on multiple devices.

A small business owner cuts the ribbon during their big opening

Image source: Getty Images

Businesses send and receive multiple invoices, and these are sometimes missed, lost, or misdirected. Bill.com Digital Inbox sends all company accounts in one place և pays for them with one click. In addition, it integrates with accounting software to automatically record transactions.

Bill.com targets small and medium-sized businesses both directly and through partnerships with 85 of America’s top 100 accounting firms and six of the top 10 US financial institutions. That strategy largely paid off in fiscal year 2021, with a strong increase in revenue and payments on its platform.

Metric:

Fiscal 2020

Financial 2021

Growth:

Payment amount:

$ 25 billion

$ 42 billion

64%

Income:

$ 158 million

$ 238 million

51%

Customers:

98,000:

121,000:

24%

Data source: company registration

But for its fourth fiscal quarter, which ended June 30, revenue growth was even stronger, suggesting that acceleration occurs as the wider economy heats up.

Metric:

Financial quarter 2020

Financial quarter 2021

Growth:

Income:

$ 42 million

$ 78 million

85%

Data source: Company registrations

However, investors should be most excited about the company’s 2022 financial year. According to Bill.com, it will earn up to $ 480 million, which will represent a growth of more than 100%.

The company is not yet profitable, but analysts expect it to reach even in the fiscal year 2022. The price seems to be high due to the sale price, the stock is 76 times more expensive, but it looks a little more. Reasonable estimates of revenue for the 2022 fiscal year 2022 fiscal year. And high-margin stocks can be an even better buy for long-term investors on a P / E basis when they make a profit.

This article presents the opinion of a writer who may disagree with the position of the “official” offer of Motley Fool Premium Consulting. We are motley! Questioning an investment thesis, even our own, helps us all think critically about investing, making decisions that will help us become smarter, happier, and richer.