Sarah Travers
The S&P 500 index is on the verge of reaching a new record high and potentially entering a new bull market, promising significant gains for investors. Historically, bull markets have delivered impressive returns, and now could be the perfect time for investors to capitalize on this upward momentum. In this article, we’ll explore two promising growth stocks, Shopify and The Trade Desk, both priced under $100, offering opportunities for patient investors looking to hold through 2024 and beyond.
Shopify’s Meteoric Rise
Shopify, the e-commerce powerhouse, has been making waves in the market, thanks to its innovative approach and strong growth prospects. The company provides a comprehensive suite of software and services that empower merchants to manage their businesses across various sales channels, from brick-and-mortar to digital storefronts. This versatility has earned Shopify recognition as a leader in digital commerce platforms, with accolades from Gartner and G2.
In the third quarter of the previous year, Shopify reported impressive results with a 25% increase in revenue, reaching $1.7 billion. This surge was driven by larger merchants, expansion into international markets, and increased pricing power. The icing on the cake was Shopify’s transition to profitability, reporting net income of $718 million compared to a loss of $159 million in the same period the previous year. The company’s profitability boost was attributed to the sale of its logistics business to Flexport.
Shopify’s future looks bright, as it positions itself to capture the growing demand for automation in e-commerce. Retail e-commerce sales are forecasted to rise by 8% annually through 2030, with wholesale e-commerce sales projected to grow at a staggering 20% annually during the same period. At its present valuation of roughly 15.7 times sales, Shopify presents an attractive opportunity for long-term investors who are prepared to retain their shares for a minimum of five years, especially when considering its historical average of 23.5 times sales.
The Trade Desk’s Ad Tech Dominance
The Trade Desk, the leading independent demand-side platform (DSP) in the ad tech industry, is making waves with its AI-powered software. What sets The Trade Desk apart is its independence, as it doesn’t own media content that could bias ad spending. This unique feature has attracted numerous retail data partners, creating measurement capabilities unmatched by other ad tech platforms. Recently, Quadrant Knowledge Solutions recognized The Trade Desk as the best ad tech platform, scoring it high in “technology excellence” and “customer impact.”
In the third quarter, The Trade Desk reported robust financial results, with revenue surging 25% to $493 million, outpacing market leader Alphabet’s ad revenue. Furthermore, non-GAAP net income rose by 29% to $167 million during the same period. The company continued to gain ground in CTV advertising and retail media, two of the fastest-growing sectors in digital advertising, thanks to strategic partnerships with retail giants like Walmart and Target.
Looking ahead, the ad tech market is expected to expand by 14% annually through 2030, and The Trade Desk is well-positioned to surpass market growth, with analysts at Morningstar projecting 22% annual sales growth over the next five years. With a current valuation of approximately 18.8 times sales, which is reasonable compared to its historical average of 27 times sales, The Trade Desk presents an attractive investment opportunity for patient investors eyeing long-term growth.
Opportunities in a Bull Market
With the S&P 500 on the cusp of a potential bull market, investors have a unique opportunity to explore growth stocks like Shopify and The Trade Desk. Both companies have demonstrated their potential for substantial growth and innovation, making them promising choices for investors looking to hold their positions through 2024 and beyond. Whether it’s e-commerce or ad tech, these stocks offer the potential for significant returns in the coming years.
