3 stocks for sale that could set you up for life
Even though the major stock indexes are hitting new highs, there are many large growth stocks that have been penalized as some investors have turned to “recovery” stocks. Investors with the right mindset and a sufficient investment horizon of three to five years will benefit from the short-term thinking that is currently plaguing these otherwise remarkable companies.
Some of the stocks that have been hit the hardest in recent months offer a murderous combination of blue chip offerings, a large and growing addressable market, and a massive secular tailwind that could deliver life-changing returns. to sell.
Let’s take a look at three actions that meet these lofty criteria and could help you prepare for life.
Shopify: Riding the Wave of E-Commerce Adoption Acceleration
One fact that has become undeniable over the past year is that not only is digital retail here to stay, but the opportunity is far greater than many imagined. Global e-commerce sales are expected to climb to $ 4.9 trillion in 2021. Even more impressive is the fact that nearly 20% of all the retail dollar is expected to come from online sales. This represents an important and growing opportunity for Shopify (NYSE: SHOP).
The company is the leading provider of business e-commerce solutions. Yet what started out as a way to level the playing field for small and medium-sized businesses has quickly grown to include services for large businesses as well.
Shopify provides merchants with cloud-based solutions that include everything they need to set up and maintain a digital retail operation. It offers tools to simplify operations for businesses selling across multiple online sales channels, including web, mobile, social media, and online marketplaces, as well as physical stores. Shopify handles many of the day-to-day details critical to success, including product management, inventory, payments, and shipping, while providing value-added services like working capital loans.
Considering the stock’s 23% drop so far this year, you’d be tempted to think its activity is lagging behind, but nothing could be further from the truth. Shopify’s first quarter revenue grew 110% year over year, while subscription revenue grew 71%. This signals a significant and growing base of recurring revenue on which to build your future. Plus, excluding a one-time gain, Shopify still increased earnings per share more than 10x from the previous year quarter.
With over a million merchants under its wing, Shopify is the clear leader in the industry, but the opportunity that remains is vast. The company generated $ 2.93 billion in revenue last year, which is paltry compared to its total addressable market of $ 78 billion – and those are just small and midsize businesses.
The Trade Desk: revolutionizing digital advertising
One of the companies hardest hit by the drop in tech stocks has been The Trade Desk (NASDAQ: TTD). The programmatic ad specialist’s shares fell, even as its growth and future prospects improved. This gives savvy investors the opportunity to own this quality business at a 44% discount.
Overall, the advertising industry is growing at a snail’s pace, which is expected to grow by around 6% in 2021 to reach $ 619 billion. The majority of this growth comes from digital advertising, which is expected to grow at about double that rate, at around 12%. Even more impressive has been the growth of programmatic advertising, reaching 25% last year and showing no signs of slowing down.
Programmatic advertising is the bread and butter of the Trade Desk. The company uses high-speed computers and complex algorithms to match ads to the right viewers. When advertisers were looking for more bang for their buck, they turned to The Trade Desk in droves last year. The company’s state-of-the-art platform can evaluate 12 million ad impressions and quadrillion permutations per second, ensuring that its ads target the right audience.
The Trade Desk has started 2021 on a high note. First-quarter revenue grew 37% year-over-year, accelerating from 33% growth last year, and skyrocketing analyst consensus estimates and forecast for leadership in the process. This growth rate shows that the company is stealing market share from its competitors. At the same time, The Trade Desk’s adjusted earnings per share jumped 57%, more than double what analysts expected.
That’s not all. The Trade Desk created Unified ID 2.0, the standard replacement for digital advertising cookies that do not rely on personal information for ad tracking, and it is supported by most of the biggest names in the industry.
The shift from traditional advertising to digital is underway and The Trade Desk is the industry leader in the fastest growing segment of a market expected to exceed $ 1 trillion over the next decade. Given that the company generated just $ 836 million in revenue last year, there is a long way to go.
NVIDIA: Gaming is just the tip of the iceberg
While some investors are joining forces NVIDIA (NASDAQ: NVDA) with its eponymous graphics processing units (GPUs) – which are the first choice of serious gamers around the world – this is just the beginning of the company’s huge opportunity. To be clear, NVIDIA is the clear leader in the discrete desktop GPU market, with an unrivaled 82% share in Q4 2020.
That alone would be reason enough to own the stock, but NVIDIA is also cornering the market when it comes to cloud computing, data centers, and artificial intelligence (AI). Its unparalleled parallel processing capability – which simultaneously enables a multitude of complex mathematical calculations and contributes to the rendering of realistic images in games – can also meet the unique requirements of AI and cloud computing.
Don’t take my word for it. NVIDIA GPUs are a must-have for every major cloud provider in the world, including Amazonis AWS, MicrosoftAzure Cloud, AlphabetGoogle Cloud, International Business Machines‘IBM Cloud and Ali Baba Cloud. It also powers a host of smaller cloud operations.
These factors combined to fuel record fourth quarter and full-year growth for NVIDIA in 2020. Sales grew 61% year-over-year in the fourth quarter, driven by gaming revenue which grew 67% and data center revenues jumped 97% – both segments delivering record performance. This led to record profits as net income jumped 53%.
NVIDIA generated $ 16.68 billion in revenue last year, a drop in the bucket compared to its market opportunity, which management believes will reach $ 250 billion over the next two years. .
Savvy investors will also appreciate being able to buy this impressive growth at a discounted price, as NVIDIA stock is currently selling at 15% of its recent highs.
In for money
It’s important to note that, commensurate with the high-risk, high-reward nature of these stocks, they also come with a high sticker price, even after the recent drop in their stock prices. Shopify, The Trade Desk, and NVIDIA sell 32 times, 21 times, and 15 times forward sales, respectively, when a reasonable price-to-sales ratio is typically between one and two. Unlike some frequent travelers, however, each of these businesses is profitable.
Investors have so far been willing to pay for the huge future potential of each of these big thieves, despite the recent turnover in tech stocks. Considered in light of their impressive revenue growth and explosive profit potential, they just don’t seem that expensive.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.