If you’ve paid attention to the stock market for the past two years, you’ve learned that growth stocks can be unpredictable.
Remember what happened to the innovative companies that made online shopping possible? Their stock price soared to unimaginable heights during the lockdown phase of the pandemic, only to crash once it became safe to leave home again.
If the upside nature of growth stocks makes you cautious, I have great news: you don’t have to commit a whole week’s worth of pay every time you want to bet on a risky growth stock. .
Growth stocks are unpredictable, but a purchase average approach ensures that you don’t put too many chips on a single one just before it drops. Now that competing online brokers have removed commissions, everyday investors can also slowly build positions.
Assuming you’ve already paid all your bills, just $200 is more than enough to buy shares of these two growth stocks. Read on to see why they have a good chance of outperforming.
1. Global-e online
E-commerce has come a long way since Amazon started selling books from a garage in 1994. One aspect that hasn’t improved much, however, is cross-border selling.
The brave people of Global-e online (GLBE 7.58%) spend their time learning a dizzying array of different languages, rules and regulations so traders don’t have to. THE international e-commerce the platform also integrates with DHL, Selling powerAnd PayPal to help merchants manage fulfillment services, customer relationships and payment processing.
Obviously, international traders are excited to reach a wider audience with the help of Global-e Online. In the fourth quarter of 2022, total revenue was up 69% year over year. At just $139.9 million, there’s also a lot more room for growth.
Cautious investors will notice that this stock is trading at a high multiple of 11.5x trailing sells, even though the underlying company continues to lose money. This combination makes its price extremely sensitive to any signs of a downturn. Slowly building a position with relatively small buys of this stock seems like the right move.
Direct-to-consumer merchants who want to maintain relationships with their customers are paving the way for ShopifyIt is (SHOP 3.08%) door. Fourth-quarter 2022 revenue jumped 26% year-over-year. This is all the more impressive when you keep in mind that 2021 was a banner year for e-commerce businesses.
The stock fell 75% in 2022 as heavy investment in new warehouses during the pandemic lockdown phase led to heavy losses when e-commerce demand returned to normal. The important thing to remember right now is that Shopify’s new distribution network gives its software solutions a competitive edge.
The company posted an operating loss equal to 11% of its revenue in the fourth quarter, but I expect its net income to return to positive territory before the end of 2023. In January , the company made wholesale price increases more than 30% for all of its subscription formulas.
Shopify has been a volatile stock in the past, and right now it’s trading at the exorbitant multiple of 264 times trailing 12-month earnings. If we zoom out to a longer timeline, we can see that Shopify is currently trading at just 20.8 times the amount it earned in 2021.
It’s been a great year, but it won’t be the best in the business. With a new execution network to justify higher prices for software subscriptions, patient investors could have a leg up in the long run.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a board member of The Motley Fool. Cory Renauer holds positions at Amazon.com, Global-e Online and Shopify. The Motley Fool holds positions and recommends Amazon.com, Global-e Online, PayPal, Salesforce and Shopify. The Motley Fool has a disclosure policy.