The bull market still has legs, like the S&P500 has recently reached new highs after a recent dip. The stock market could continue to rise for at least another three years, if history is any guide.
Previous bull markets lasted about five years, but over the past forty years the stock market has tended to rise for about a decade before the next bear market hits. Investors who put their money into top growth stocks can earn significant returns. Here are two you can buy now.
1. Shopify
Shopify (NYSE: STORE) is building a world-class operating system for businesses that positions it well for growth in the global e-commerce market. Quarterly revenue growth has consistently hovered above 20% over the past year, indicating a profitable investment opportunity.
Starting and growing a business is complicated, which is why more and more merchants are turning to Shopify. Adjusted revenue grew 25% year over year in the second quarter, driven by a 27% increase in subscription solutions. Shopify has successfully expanded its offering from online commerce tools to point-of-sale, business-to-business and cross-border services.
As Shopify becomes an all-in-one merchant services platform, it continues to gain market share in global e-commerce. Gross payment volume grew 61% year over year to $41 billion in the second quarter alone. That’s an annual run rate of more than $160 billion, which is a lot, but that’s peanuts in a global e-commerce market that’s expected to reach $8 trillion by 2027, according to eMarketer.
Of course, the total trading market is much larger than that. The total number of consumer payments – online and in-store combined – in the global economy is estimated at $20 trillion. Reflecting this massive opportunity, Shopify’s point-of-sale platform is growing rapidly, with offline gross merchandise volume increasing 27% year over year in the second quarter. Management sees significant growth potential for its payment service through international expansion and offline business-to-business capabilities.
The stock is a great buy as it bounces back from the recent dip. The company’s momentum and future opportunities to expand internationally should deliver above-average returns for investors in the coming years.
2. Salesforce
Salesforce (NYSE: CRM) is another subscription-based company that helps companies handle sales leads more efficiently and improve customer service. It offers a range of software applications for managing sales, marketing, messaging and more. International Data Corp. calls it the #1 provider of customer relationship management, but with a market share of only 22%, Salesforce still has a lot of growth potential.
Salesforce has great opportunities with its data cloud, which brings together all a company’s data on one platform. Demand for this product was high, with the number of paid data cloud customers more than doubling from the previous year’s quarter. Getting customers to the cloud is critical to enabling Salesforce to respond to the growing demand for artificial intelligence (AI) services.
The upcoming launch of the new Agentforce AI platform could be a game changer. This tool can analyze data, automate customer service queries, and qualify sales leads. Salesforce said bookings for new AI products more than doubled last quarter, with 1,500 AI deals signed in the last quarter alone.
Salesforce isn’t growing revenue at the double-digit rates of a few years ago, but the stock offers significant upside as margins expand. Free cash flow grew by a whopping 20% ​​year-over-year in the second quarter, putting the company on track to double free cash flow within five years, which is a catalyst for the stock price.
The stock trades at a price-to-sales ratio of 7, which is very reasonable compared to other software companies, which trade at around 10 times sales. Investors can expect shares to rise in line with free cash flow growth, meaning the potential to double your money by 2030.
Should You Invest $1,000 in Shopify Now?
Before you buy shares in Shopify, consider the following:
The Motley Fool stock advisor The analyst team has just identified what they think is the 10 best stocks for investors to buy now… and Shopify wasn’t one of them. The ten stocks that survived the cut could deliver monster returns in the coming years.
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John Ballard has no position in any of the stocks mentioned. The Motley Fool holds and recommends positions in Salesforce and Shopify. The Motley Fool has a disclosure policy.
History Says the S&P 500 Could Rise: 2 Monster Stocks to Buy Now was originally published by The Motley Fool
