A Bull Market Is Coming: 2 Monster Growth Stocks to Buy With $100 Right Now

The S&P 500 is just 9% away from its record high, putting the index within striking distance of bull market territory. Far from being arbitrary, history says that milestone points to more substantial gains in the future. The S&P 500 has returned an average of 169% during the 12 bull markets that have taken place since its inception in 1957.

Investors that want to ride that momentum should be putting money into the market today, and Shopify (SHOP 1.61%) and Cloudflare (NET 1.45%) are cheap in every sense of the word. Both stocks are priced below $100 per share and they both trade at reasonable valuations relative to their monster growth prospects.

Read on to learn more.

1. Shopify: The second-largest U.S. e-commerce company

Shopify is on a mission to make commerce easy. Its software gives businesses a single view of their physical and digital storefronts, integrating online marketplaces, social media, and direct-to-consumer websites into one dashboard. The company also provides a broad range of ancillary services for payments, logistics, cross-border commerce, and other merchant needs.

Shopify offers more flexibility than marketplaces like Amazon and it provides more functionality than digital commerce platforms like Salesforce. Those statements are somewhat subjective, but the results speak for themselves. Shopify is the market leader in e-commerce software and omnichannel commerce software. It also accounts for more than 10% of digital retail sales in the U.S., making it the second-largest domestic e-commerce company behind Amazon, and its market share is projected to reach 11% in 2024.

Shopify stumbled under inflationary pressure last year, but the company has steadily regained its momentum in 2023 and that trend continued in the third quarter. Revenue rose 25% to $1.7 billion, an acceleration from 22% growth in the year-ago period. And Shopify reported GAAP net income of $718 million, up from a loss of $159 million. Investors have good cause to think that momentum will persist.

Shopify has several irons in the fire, but business-to-business (B2B) e-commerce is a particularly exciting opportunity because the market is bigger and expanding faster than retail e-commerce. The company continued to innovate and add B2B features to its enterprise-grade platform, Shopify Plus, in the third quarter, and management said B2B volume nearly doubled compared to the prior year.

Here’s the big picture: Shopify has already carved out a strong presence in retail e-commerce, a market projected to expand by 8% annually to reach $8 trillion by 2030. And the company is now gaining momentum in B2B e-commerce, a market forecast to increase by 20% annually to hit $33 trillion by 2030. That hints at rapid sales growth.

Indeed, Morningstar analyst Dan Romanoff believes Shopify will grow revenue by 23% annually over the next five years. That forecast makes its current valuation of 12.1 times sales look quite attractive, especially when the three-year average is 25.6 times sales. Patient investors should have no reservations about buying a small position in Shopify stock today.

2. Cloudflare: A leader in zero-trust security and developer services

Cloudflare provides a range of application, network, security, and developer services that connect, accelerate, and protect corporate infrastructure. Its cloud platform offers market-leading speed, and it handles about 20% of internet traffic. That scale allows Cloudflare to analyze vast quantities of performance and security data from across the web, creating a network effect that makes its platform faster and safer with each new data point.

Cloudflare recently rebranded itself as a connectivity cloud in an effort to better convey its purpose to potential customers. But whichever way the company describes of itself, it has established a strong presence in several cloud verticals due to its broad portfolio, unparalleled performance, and significant scale. Cloudflare is a recognized leader in content delivery network software, zero-trust network access, and development platforms.

Cloudflare reported solid financial results for the third quarter. Its customer count climbed 17% to a little over 182,000 and the average customer spent 16% more. Those numbers collectively point to the successful execution of its land-and-expand strategy. In turn, revenue rose 32% to $336 million and non-GAAP net income jumped 189% to $55 million. Investors should expect more of the same.

Cloudflare has hardly made a dent in its $146 billion addressable market. But management sees tremendous tailwinds in zero-trust network security and developer services related to artificial intelligence (AI). Indeed, CEO Matthew Prince believes “Cloudflare is the most common cloud provider used by the leading AI companies.”

To that end, the company is targeting a revenue run rate of $5 billion by the third quarter of 2027, which implies revenue growth of 39% annually during the interim. That makes its current valuation of 17 times sales look quite reasonable, especially when compared to the three-year average of 40 times sales. Investors should consider buying a small position in this growth stock now.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Trevor Jennewine has positions in Amazon and Shopify. The Motley Fool has positions in and recommends Amazon, Cloudflare, Salesforce, and Shopify. The Motley Fool has a disclosure policy.

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