2 Great Growth Stocks to Buy Now and Hold for the Long Term

October has historically been a good month to have money in the stock market. S&P 500 According to Bespoke Investment Group, there have been 61 increases of at least 10 percent since World War II, with nearly a third of those rises starting in October.

An example of this is the bear market that started on January 3, 2022 and ended on October 12, 2022. The S&P 500 rallied over 60% in the subsequent bull market. And history suggests that upward momentum may intensify in October and beyond, due in part to holiday spending.

Past performance is never a guarantee of future returns, but Shopify (NYSE: STORE) And Uber Technologies (NYSE: UBER) They are valuable long-term investments, no matter what happens next month. Here’s why.

Shopify: Market leader in e-commerce software

Shopify provides commerce software and services for businesses of all sizes. Its platform allows sellers to manage sales across offline and online channels, including social media, marketplaces, and dedicated websites. Shopify also offers adjacent merchant solutions for marketing, payments, and logistics. This turnkey approach has helped the company maintain its leadership position in the industry. e-commerce and omnichannel commerce software.

Shopify initially prioritized small and medium-sized businesses, but it’s also engaging larger brands with Shopify Plus and Commerce Components. The former is a complete commerce platform designed for businesses, and the latter allows businesses to adopt individual elements of Shopify’s commerce stack. Both include wholesale commerce tools that expand Shopify’s addressable market beyond retail.

Shopify looked strong in the second quarter. Revenue rose 21% to $2 billion, including a 4 percentage point headwind from the sale of its logistics business. Meanwhile, non-GAAP (adjusted) earnings rose 85% to $0.26 per diluted share. “More and more merchants around the world rely on Shopify’s unified commerce operating system to accelerate growth and simplify complex operations,” President Harley Finkelstein told analysts.

More importantly, the company has made progress in its three strategic growth vectors: physical retail, wholesale trade and international markets. In the second quarter, offline gross merchandise volume (GMV) increased 27% and wholesale GMV increased 140%; both of which outpaced the 22% growth in total GMV. Meanwhile, the number of international sellers using Shopify increased by 30%.

Wall Street expects earnings to grow at an annual rate of 45% over the next three years. This makes the current valuation of 82 times earnings seem reasonable. Whether or not the stock market starts to rally in October, I think investors who buy a small position in Shopify today will be happy with their decision five years from now.

The story continues

Uber Technologies: Market leader in ridesharing

Uber divides its business into three categories: Its mobility segment connects passengers with transportation, its delivery segment connects consumers with local grocery stores and restaurants, and its cargo segment connects shippers with carriers. Uber operates the largest ride-sharing platform and the second-largest food delivery platform in the U.S. by revenue, according to Bloomberg.

One of the features that distinguishes the company from others is its ability to offer ridesharing and delivery services on a single platform. Uber is able to encourage consumers and drivers on both sides of its ecosystem to engage with the other side, and its cross-promotional activities are paying off. According to a company presentation, 22% of first-time mobility trips come from a delivery app, and 31% of first-time delivery trips come from a mobility app.

Uber has another important advantage when it comes to its private data. By providing ridesharing and delivery services, the company develops a deep understanding of users’ tastes and preferences and uses this information to connect consumers with relevant advertising. User data also creates a network effect that helps Uber predict demand and route drivers more effectively over time.

Uber reported solid financial results in the second quarter. The number of monthly active platform consumers increased by 14% to 156 million, and the number of trips increased by 21% to 2.7 billion; This means users interact more frequently. In contrast, revenue rose 16% to $10.7 billion, led by strong growth in mobility sales, and GAAP earnings rose 161% to $0.47 per diluted share.

Wall Street expects Uber’s earnings to grow 48% annually over the next three years. This consensus makes the current valuation of 84 times earnings seem reasonable. Investors will feel comfortable buying a small position in Uber at the current price as long as they plan to hold their shares for at least three to five years.

Should you invest $1,000 in Shopify right now?

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Trevor Jennewine They have positions at Shopify. The Motley Fool has positions in and recommends Shopify and Uber Technologies. The Motley Fool has a feature disclosure policy.

Stock Market Rising Could Begin in October: 2 Great Growth Stocks to Buy Now and Hold for the Long Term originally published by The Motley Fool