Computer giant Hewlett-Packard (NYSE: HPQ) was founded in a California garage in 1939. So was Apple (Nasdaq: AAPL) 37 years later. 

Both the Palo Alto garage, the birthplace of HPQ, and the modest Los Altos house of Apple fame are, now designated historical landmarks.

One of my Fast-Track Millionaire holdings also had humble beginnings — it was founded in the current CEO’s kitchen. Now, I’m not saying it will be a historical landmark someday, but I am expecting big things from the company — which is why we’re holding on for even more gains after a 40% surge in three months.

Of course, not every company that starts small has the potential to make it big. But this one just might… I think its business premise has that elusive potential that every start-up dreams of — but only a select few will ever be able to achieve. That’s because, in many ways, sales-tax software company Avalara (NYSE: AVLR) has already proven its mettle. And not just because the stock has rallied significantly since we bought it, but because the company is a leader in a large market where there is still room to grow.

Making Taxes Easier For Businesses
​Because AVLR makes cloud-based sales tax software, it by definition makes it easier for any company that does or wishes to do business on the internet to comply with the difficult and ever-changing set of rules for collecting sales taxes on purchases, regardless of business size, industry or, eventually, country.

For those who might not be aware, it’s become increasingly more important for sellers to be compliant with sales tax regulations since last summer. That’s when the U.S. Supreme court ruled that internet-based businesses are no longer exempt from state sales taxes, even in states where they don’t have a physical presence.

This ruling affects virtually every single company that does business on the internet. It significantly changes the way many companies will have to operate. Before the ruling, the requirement for internet-based companies was only to collect sales taxes in states where they had a physical presence — a brick and mortar store, for example. The ruling now gives states the right to collect and remit sales taxes on out-of-state purchases and 33 states have already chosen to do so.

As you can imagine, the market of selling software to help companies comply with sales tax rules was already significant to begin with. That’s because sales tax compliance is a much more complicated issue than it might seem at first glance.

There are 12,000 taxing jurisdictions in the United States. These jurisdictions often overlap, and they aren’t always contiguous, either. The same item can be taxed in many ways, depending on where it’s sold. Businesses file sales tax returns in almost every jurisdiction, and most often monthly. The expenses of following up on all the changes, changing the amounts calculated, remitting sales taxes, and also filing tax returns, all add up.

Avalara has long been focused on mid-size companies (the company estimates there are about 270,000 of them in the United States). By providing cloud-based software to address all the above problems, AVLR is able to help these companies concentrate on their businesses and not on the mundane tasks of compliance.

Looking Forward
The future is looking bright for Alvara. Take a look at the just-reported quarter, which started the year on a high note…

While the company lost money in the three months ended March 31, the operating loss was much smaller than a year ago ($7.8 million on a non-GAAP basis compared with $10.3 million a year earlier). Revenue totaled $85 million, up 38% from the year-ago period. This strong growth has resulted from an increased demand from both new and existing customers and a range of new initiatives. For the full year 2019, Avalara expects revenue of $346 million to $349 million, compared with actual revenue of $272.1 million in 2018.

The boost from the 2018 Supreme Court ruling should continue as more companies across the country will have to be compliant with more and more sales tax rules. But ALVR isn’t resting on its laurels. The company has been actively expanding — diversifying its business lines and making sure it can grow in the future far beyond just being a tax software company.

A few months ago, AVLR announced it was buying the operational assets of Compli, a provider of compliance services, technology, and software to producers, distributors, and importers of alcoholic beverages in the United States. 

And on Feb. 7, Avalara said it had acquired artificial intelligence technology along with the team that created this technology from Indix, a Seattle startup. This is a step that shows vision: Indix has vast amounts of data on product information, and together with AVLR’s business outreach, the possibilities are nearly limitless. It’s a likely step toward becoming part of every single internet transaction.

Action To Take
This is a big task. But it’s exactly because of this vision — and the potential to match — that I like AVLR. 

Of course, as great as this company is, a 40% gain in less than three months for subscribers who followed my initial recommendation can be tempting. I wouldn’t fault my readers if they took some gains off the table, but I think we’ll have plenty more to celebrate in the months ahead.

If you weren’t a Fast-Track Millionaire subscriber who followed my advice and bought AVLR, you could still buy the stock today and probably do well — but I’ve found an even bigger opportunity…

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