Do you have $1,000? 2 cheap growth stocks to buy right now
Ah, growth stocks. Memory? They seem to have become quite rare in 2022 after showing such promise over the past few years (including the pandemic-affected trading years of 2020 and 2021). This scarcity has many investors wondering if the good times will ever return.
While it is unlikely that all formerly high-growth stock will return to previous highs, many will recover. Those who have invested in companies with strong underlying businesses operating in sustainable sectors of the economy should see sustained business growth (and stock growth) return. Those who know where to look can take advantage of this inevitable rally and increase their potential long-term returns by buying now when these growth stocks are trading low.
If you have $1,000 to invest and don’t need it to balance your budget, pay off credit card debt, or bolster an emergency fund, here are two such stocks you might want to consider: be invest.
1. Shopify: The e-commerce giant is down but far from out
Factors such as inflation and fears of a recession have caused many consumers to cut spending. For an e-commerce specialist like Shopify (STORE -9.48%), This withdrawal had some effect on its operations and scared off some investors. The stock is trading down nearly 80% since the start of the year.
Shopify offers an easy-to-use, integrated platform for businesses of all sizes and in multiple countries to operate online stores as well as retail point-of-sale systems. While online and in-store spending may be slowing right now, Shopify is well positioned for robust growth in an eventual recovery.
A recent study by BuiltWith found that Shopify has a 29% share of all e-commerce websites in the US, more than any other such platform. Globally, Shopify boasts a 19% market share, the second largest of any e-commerce platform in the world. BuiltWith estimates that there are 2.6 million Shopify websites in operation in the United States alone.
Market research firm GuruFocus estimates that 95% of all sales will be made through e-commerce by 2040 (it’s currently around 14%). Even though that estimate is high, Shopify’s considerable market share should allow it to capture some of what should be huge long-term growth.
Beyond Shopify’s continued control of a massive share of the global e-commerce market, its finances — while not up to par with the same growth it witnessed earlier in the pandemic — are anything but. a sea of red. The company posted a net loss of $1.2 billion in the last quarter, but total revenue was up 16% year over year (and 53% on a three-year compound basis) , while monthly recurring revenue (MRR) increased 13% year-on-year. – there is a period.
More merchants are using its full-service enterprise solution Shopify Plus, which accounted for 31% of the company’s MRR last quarter, up from 26% a year ago. And despite the impact of inflation on gross merchandise volume as a whole, this metric still rose 11% year-over-year and 50% on a three-year compound basis, the management noting that it “continues to outpace the growth of overall U.S. online and offline retail markets.”
With a current price-to-sales (P/S) ratio of seven, Shopify’s stock looks cheaper than it has in years. Based on its current price, a $1,000 investment would net you just over 35 shares. For risk-resilient investors with an appetite for growth stocks, Shopify remains an attractive buy to consider, even in today’s market.
2. Upstart: a company changing the future of credit
Soaring interest rates and the increased threat of defaults have some investors wondering Assets received (UPST -7.53%). Shares of the company have fallen more than 86% since the start of the year, and the company now trades at a P/S of two. At its current price, a $1,000 investment would buy about 48 shares.
The mere fact that a stock is trading at selling prices should never be the only thesis on which to base an investment. But while the short term presents unique challenges for a company like Upstart, forward-thinking investors may still find a lot to like in this stock.
Upstart wants to revolutionize the way credit is granted to borrowers. Its management argues that the traditional credit score model does a poor job of assessing creditworthiness and whether someone has what it takes to repay a loan. Upstart’s proprietary AI-powered platform assesses a wider range of factors (including the applicant’s education and work history) to determine loan approval.
Why is this important? Well, according to an Upstart study, about 80% of Americans have never defaulted on any type of loan, but less than half qualify for lower interest rate credit. Through its partners, Upstart has created nearly $29 billion in loans to date (73% approved using its automated platform). Using its proprietary model, Upstart approves loans at the same rate as major US banks, but with 75% fewer defaults.
Upstart currently handles debt consolidation loans, auto loans, and personal loans. Rising operating expenses weighed on the company’s results last quarter, but its network of banking partners and credit unions continues to grow, from 57 to 71 in the prior quarter.
Meanwhile, its revenue jumped 18% year-over-year. Upstart is expanding its network of auto dealership partners as it expands its presence in the auto loan market. In the second quarter alone, 19 auto lending partners signed up on Upstart’s platform, while the company expanded its network of auto dealership partners (which includes Honda, Subaru, Toyotaand Ford car company) to 640, compared to 525 in the previous quarter.
Beyond the current interest rate environment, Upstart has incredible growth potential as it expands its network of partners and as more consumers come to its platform to access the credit that could help them. be unfairly denied elsewhere. This gives Upstart resilience well beyond the current market, and forward-thinking investors may want to consider at least a small position in this stock to capitalize on this growth trajectory.