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To double your money by 2030, you should look for companies that consistently show double-digit revenue growth. Assuming you buy these stocks at reasonable valuations, the stock price will typically follow the growth of the business. Here’s why Investing in growth stocks This can be the best way to build wealth in the long run.
One area where reasonably priced growth stocks are growing right now is the $6 trillion global e-commerce market. Here are two fast-growing leaders that could double your investment in the next five years.
1. Shopify
Shopify (NYSE: STORE) The stock has been an incredibly rewarding investment for those lucky enough to get in early after the company's initial public offering (IPO) in 2015. The shares have returned 2,800%, but the company still has plenty of room to continue growing and generating significant returns for years to come.
Shopify provides businesses with the tools to open and manage an online store. The company generates revenue through subscriptions to its platform, but most of its revenue comes from selling additional services to merchants, including payment processing, loans, and shipping.
The massive e-commerce market represents a huge opportunity, as the company’s growth suggests. Second-quarter revenue grew 25% year over year after excluding the impact of the sale of its logistics business, and management is guiding for revenue to grow in the low to mid-20s in the third quarter. Keep in mind that Shopify has been around for more than a decade — and it’s still growing at that high rate.
The company has begun to focus more on helping merchants expand internationally, which could keep its momentum going for several more years. Cross-border sales make up just 14% of total merchandise volume, but international merchandise volume is growing faster than North America, up 27% year-over-year in the second quarter. This trend illustrates how products like Shopify Markets are strengthening the company’s competitive advantage as a one-stop shop for merchants.
Stocks Price to Sales Ratio (P/S) The company’s $12.50 stock price is at the low end of its previous 10-year trading range. With Wall Street analysts estimating the company’s revenue to grow at a 21% annual rate over the next few years, the company should maintain a growth rate of at least 15% through the end of the decade. That’s enough to double the stock’s value, assuming it continues to trade around its historical average price-to-sales multiple.
2. Coupang
Cobang (NYSE: CPNG) He is the pioneer E-commerce A store in Korea. It has more than doubled its revenue since 2020. It took a hit after its IPO a few years ago, and now the stock is priced reasonably well given its growth potential. Coupang is expected to deliver market-beating returns.
Adjusted second-quarter revenue rose 23% year-over-year, excluding the impact of its acquisition of luxury retailer Farfetch. Shares have fallen 54% since its initial public offering in 2021, but are up 16% over the past year as the company has shown potential to improve margins and profitability.
Coupang generated $1.5 billion in free cash flow on $27 billion in revenue last year — a respectable margin for an online retailer. The company uses non-retail services like food delivery through its WOW membership program to build customer loyalty and boost margins. That may sound very familiar. Amazon Key customers, which speaks to the opportunity that Coupang provides.
Investors may be underestimating the growth potential of services and its impact on Coupang’s profitability. Gross margin improved 2 percentage points in the fourth quarter excluding the impact of Farfetch, driven by supply chain efficiencies and growth in services offerings that boost margins. The company is also benefiting from investments in automation using artificial intelligence to drive greater productivity.
Meanwhile, the stock is trading at a modest price-to-sales ratio of 1.48, lower than Amazon’s price-to-sales multiple in its early years of growth. Analysts expect Coupang’s revenue to grow more than 16% annually over the next few years.
With Coupang in the early stages of expansion in Taiwan, revenue is expected to continue to grow at double-digit rates through the end of the decade. The stock only needs to continue trading at its current discounted price-to-sales multiple for shareholders to double their money by 2030.
Should You Invest $1,000 Into Shopify Right Now?
Before buying shares in Shopify, keep this in mind:
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John Mackey, the former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. John Ballard The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Coupang, and Shopify. The Motley Fool has no position in any of the stocks mentioned. Disclosure Policy.
2 Growth Stocks That Could Double By 2030 Originally posted by The Motley Fool
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