Growth-oriented investors have been on something of a rollercoaster ride in recent years. Many companies in the “growth stock” category struggled two years ago, but in the bull market we’re experiencing today, they’re delivering very different results. But investors need to look beyond the short term and look for stocks that can perform well over the long term, regardless of whether they’re currently keeping up with the broader market.
For those who want to invest $1,000 in the market right now, I recommend considering Shop (NYSE: STORE) And DexCom (NASDAQ: DXCM). This is why.
1. Shopping
E-commerce giant Shopify has not been doing well this year, with shares of the company down 15% to trade at just under $64 each.
The company’s financial results haven’t been as impressive as the market wanted, and that can be especially problematic for growth stocks with high valuations. Shopify’s forward price-to-sales ratio stands at 9.6 — the undervalued range is typically described as a ratio of 2 or lower.
Shopify’s stock price may remain volatile in the short term, but there are good reasons to hold on to the stock for the long term. The e-commerce industry is set to continue to grow for a long time, and management wants to ride that wave for as long as possible. Management’s goal is for Shopify to become a 100-year-old company. Saying it is one thing, achieving it is another. But Shopify’s journey is off to a pretty good start.
It has become a leader in helping merchants build online storefronts. It allows them to sell and market their products across most online channels, including social media platforms. It has an app store with thousands of customization options to meet the specific and varied needs of all merchants. In other words, it aims to provide everything businesses need to succeed, and it’s doing a great job of that so far. That’s why Shopify’s revenue has been growing rapidly in the past. The company ended 2023 with an ecommerce market share of over 10% based on gross merchandise volume.
It also does business in more than 175 countries. Even in the U.S., e-commerce represents just 15.9% of total retail sales. That number is lower in many other countries, highlighting Shopify’s enormous growth potential. Investors could buy 15 shares of the company for $1,000 and still have some change left over. That would be a great move.
2. DexCom
The global status of diabetes is alarming. The prevalence of this chronic disease has been increasing for decades. Like most chronic conditions, it is difficult and challenging to treat, and hundreds of billions of dollars are spent annually on related medical costs. Innovative technologies that can help diabetes patients achieve better outcomes are important.
DexCom offers just such a technology with its continuous glucose monitoring (CGM) devices that help diabetics track their blood sugar levels throughout the day. CGMs are better than traditional blood glucose meters (BGMs) for several reasons. Let’s just mention two.
First, CGMs can take measurements automatically, even while patients are asleep. BGMs must be operated manually and only report a patient’s blood glucose level at the specific time of a test. Second, CGMs can automatically send alerts to patients, caregivers, and medical professionals when a person’s blood glucose goes too high or too low, something BGMs cannot do. DexCom is one of two leaders in the CGM market.
Financial results have been on a strong growth path for some time now. In the first quarter, revenue rose 24% year over year to $921 million, and adjusted earnings per share nearly doubled to $0.32.
How much growth potential is there in this market? Consider that DexCom ended 2023 with 2.3 million customers. That number doesn’t even come close to 1% of the half a billion adults with diabetes worldwide. And while DexCom doesn’t have access to many of these potential customers—since they live in countries where it doesn’t have a presence—the company has repeatedly said that it has significant room to grow, even in the U.S.
The addressable market will grow even larger as it moves into new areas, as it has historically done. DexCom is trading at just under $113 a share at the time of writing, so investors can get eight shares for $1,000.
Don’t miss this second chance at a potentially lucrative opportunity
Ever felt like you missed the boat on buying the hottest stocks? Then you want to hear this.
In rare cases, our expert team of analysts provides a “Double Down” Stocks recommendations for companies they think are about to explode. If you’re worried you’ve already missed your chance to invest, now’s the best time to buy before it’s too late. And the numbers speak for themselves:
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Amazon: if you invested $1,000 when we doubled in 2010, you would have $22,254!*
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Apple: if you invested $1,000 when we doubled in 2008, you would have $41,863!*
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We are currently issuing “Double Down” warnings on three incredible companies, and there may not be another opportunity like this anytime soon.
See 3 “Double Down” Stocks »
*Stock Advisor returns as of July 2, 2024
Prosper Junior Bakiny has positions in Shopify. The Motley Fool has positions in and recommends Shopify. The Motley Fool recommends DexCom. The Motley Fool has a disclosure policy.
2 Top Growth Stocks to Buy with $1,000 was originally published by The Motley Fool
