If you aim to increase your investment amount by two times by 2030, it is advisable to invest in companies that demonstrate steady revenue growth in the double digits. As long as you purchase these stocks at fair prices, their value is likely to increase in line with the company’s growth. This is the rationale behind it. Investing in stocks that are expected to grow significantly in value. Investing can be the most effective method to accumulate wealth in the long run.
Currently, a sector that is yielding affordable growth stocks is the expansive $6 trillion global e-commerce industry. Within this sector, there are two rapidly expanding frontrunners that have the potential to increase your investment twofold within the next five years.
1. Shopify
Shopify ( SHOP 0.82% ) Stock has proven to be a highly profitable investment for early investors since the company went public in 2015. The stock has yielded a remarkable return of 2,800%, indicating significant potential for continued growth and impressive returns in the future.
Shopify offers businesses the necessary resources to create and control an e-commerce website. Its main source of income comes from subscription fees, although a significant portion of its revenue comes from offering extra services to merchants such as payment processing, loans, and shipping options.
The vast e-commerce industry presents a significant potential for growth, as demonstrated by the company’s recent performance. Revenue in the second quarter increased by 25% compared to the previous year, excluding the effects of selling its logistics division. Management forecasts a further revenue increase in the range of low to mid-20s for the third quarter. It is worth noting that Shopify has been in operation for over ten years and continues to maintain this rapid growth.
The company is now placing greater emphasis on assisting merchants in expanding their businesses globally, a strategy that could sustain its growth for many years to come. While cross-border sales currently account for only 14% of its total sales volume, the company’s international sales are increasing at a faster rate than those in North America, with a 27% annual growth rate in Q2. This shift highlights how offerings such as Shopify Markets are enhancing the company’s competitive advantage as a comprehensive solution for merchants.
The stock’s The ratio of a company’s market capitalization to its total sales revenue is known as the price-to-sales (P/S) ratio. The stock is currently trading at the lower end of its 10-year range, with a P/S ratio of 12.5. Analysts predict that the company will see a 21% annual revenue growth in the coming years, which should sustain a growth rate of at least 15% until the end of the decade. If the stock continues to trade at its historical average P/S multiple, this growth should double its value.
2. Coupang
Coupang ( CPNG 5.08% ) is the leading e-commerce A company based in Korea has seen its revenue increase by over 100% since 2020. Initially, the company’s stock dropped significantly right after its IPO a couple of years back, but now it is considered to be priced fairly compared to its potential for growth. It is expected that Coupang will provide returns that outperform the market.
Excluding the impact of its purchase of Farfetch, the company experienced a 23% increase in adjusted revenue in the second quarter compared to the previous year. While the stock has declined by 54% since its initial public offering in 2021, it has seen a 16% rise in the past year due to the company demonstrating the ability to enhance margins and profitability.
Coupang made $1.5 billion in revenue. free cash flow Generating $27 billion in revenue over the past year, which is considered a healthy profit margin for an e-commerce business. The company is enhancing customer loyalty and increasing profits by offering non-retail services such as food delivery through its WOW membership program. This strategy is likely reminiscent of familiar tactics used by other companies. Amazon Coupang’s potential lies in its Prime customers.
Investors may underestimate the growth opportunities in services and how they could positively affect Coupang’s profitability. Gross margin Excluding the influence of Farfetch, the company’s performance improved by two percentage points in the last quarter. This growth was fueled by enhanced supply chain operations and the expansion of profitable service options. Additionally, the company is utilizing investments in automated processes using artificial intelligence to enhance productivity.
In the meantime, the stock is being traded at a low P/S ratio of 1.48, which is lower than the P/S ratio Amazon had during its initial growth phase. Analysts anticipate Coupang’s revenue to increase by more than 16% each year in the upcoming years.
As Coupang is still in the initial stages of growth in Taiwan, its revenue is expected to keep increasing at a rate of over ten percent until the end of the next ten years. If the stock maintains its current lower price-to-sales ratio, investors could potentially see their investment value double by the year 2030.
