SHOP - 3 Growth Stocks to Create Long-Term Wealth (and Keep It!)
2023-10-04 12:16:31 ET
InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Even if their growth rates have slowed quite a bit since the pandemic, there are still noteworthy growth stocks across the market. Beyond just the often-hyped AI sector, there are noteworthy opportunities in a wide range of growth stocks spanning digital advertising, communications and the e-commerce sectors.
Of course, a potential market downturn could always be around the corner. Investors looking at most hyper-growth stocks run the risk of losing a significant portion of their capital in short amounts of time investing in the wrong stocks. Indeed, i n 2023, the stock market’s misfortunes have notably shifted due to factors like rising inflation and interest rates.
That said, certain growth stocks have benefited from this environment and taken in significant shareholder capital. I think specific growth stocks are well-positioned for an uncertain future, making these excellent picks for those with an investing horizon of ten years or more.
Let’s dive into three of the best options for long-term investors to buy now to growth their wealth in the long term.
Meta Platforms (META)
Meta Platforms (NASDAQ: META ), primarily recognized for its social media giants, is making significant strides in the world of AI. Despite challenges, the company introduced the Llama large language model in February, which has competed favorably with OpenAI’s ChatGPT. Meta has since launched Llama 2, adopting an open-source strategy to attract developers with transparency and customization options.
Meta Platforms had a significant last week with Meta Connect , which revealed Meta Quest 3, Ray-Ban smart glasses and AI updates. Although the stock initially dropped 4.1% after CEO Mark Zuckerberg’s keynote, it quickly rebounded, closing the session down just 0.4%.
Zuckerberg introduced the $499 Quest 3 virtual-reality headset, branding it as the first mainstream mixed-reality device, set to bridge the physical and digital worlds. The Quest 3 is slated for release on Oct. 10. Meta’s AI strategy is geared for success, embracing an open-source approach that allows developers worldwide to test, enhance and refine its code, ensuring it thrives in the AI landscape.
Zoom Communications (ZM)
Zoom (NASDAQ: ZM ) stock soared during the pandemic, hitting nearly $560 in Oct. 2020, but has since declined more than 85% from its peak. While the pandemic tailwinds may be fading, the work-from-home trend remains in place, offering significant long-term growth potential for Zoom.
The company’s future revenue growth relies on its success in the corporate market and its transformation into a broader business communication platform. So far, Zoom’s stock has seen a modest 2% gain in 2023, lagging behind many other software stocks . Despite this, Zoom Video maintains a strong cash position with approximately $6 billion on its balance sheet.
Zoom is infusing AI into various products like Zoom IQ , streamlining workplace collaboration by summarizing chats, organizing ideas, and generating content. The company also recently invested in AI-startup Anthropic, integrating it into their Contact Center platform. Additionally, Zoom enhances agent productivity through automated work shifts and performance monitoring with Zoom Workforce Management.
These are the kinds of growth drivers I think investors should be focused on moving forward.
Shopify (SHOP)
In Q1 2023 , Shopify (NYSE: SHOP ) excelled in gross merchandise volume and revenue growth, and achieved positive earnings and free cash flow. The company continued this trend in the second quarter, with accelerated revenue growth and better-than-expected adjusted earnings. Additionally, divestitures like the logistics business sale could positively impact future results.
The company runs a platform enabling small businesses to create online stores and reach a global customer base. Q2 saw accelerated earnings, with $1.7 billion in revenue and $835 million in profits. According to Shopify President Harley Finkelstein, they’re not only enhancing product delivery but also expanding their global merchant network while improving free cash flow generation.
I think that investors looking to play the e-commerce space should consider SHOP stock as a top option in this space. The company helps democratize the sale of online goods, offering a unique platform for business owners to set up an omnichannel presence. I think we’ll see more of a mix of online and bricks-and-mortar businesses set up over the long term, as consumers continue to shift they way they shop. Shopify helps businesses meet this need.
On the date of publication, Chris MacDonald has a LONG position in META. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines .
Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.
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