Growth investors have had their ups and downs in recent years. Many companies in the “growth” category were struggling just two years ago, but in the current bull market, they are performing very differently. However, investors should look beyond the short term and look for stocks that can perform well over the long term, whether or not they keep pace with the broader market.
For those who have $1,000 to invest in the market right now, I recommend considering Shopify (NYSE: BOUTIQUE) And DexCom (NASDAQ: DXCM). Here’s why.
1. Shopify
E-commerce giant Shopify hasn’t had a great year. Shares of the company have fallen 15% and are trading at just under $64 each.
The company’s financial results haven’t been as impressive as the market would have liked, which can be particularly problematic for highly valued growth stocks. Shopify’s forward price-to-sales ratio stands at 9.6 — the undervalued range is typically described as having a ratio of 2 or less.
Shopify’s stock price may remain volatile in the short term, but there are good reasons to hold the stock for the long term. e-commerce industry Shopify is going to continue to grow for a long time, and management wants to ride this wave for as long as possible. Management’s goal is for Shopify to become a 100-year-old company. Saying that is one thing, getting there will be another. But Shopify’s journey has started off pretty well.
Shopify has become a leader in helping merchants create online storefronts. It allows them to sell and market their products on most online channels, including social media platforms. It has an app store with thousands of customization options to meet the specific and varied needs of all merchants. In other words, it aims to provide everything businesses need to succeed, and it’s doing a great job so far. That’s why Shopify’s revenue has grown rapidly in the past. The company ended 2023 with an e-commerce market share of over 10% in terms of gross merchandise volume.
Shopify also operates in over 175 countries. Even in the US, e-commerce only accounts for 15.9% of total retail sales. This figure is lower in many other countries, highlighting the huge growth potential Shopify has. Investors can buy 15 shares of the company for $1,000 and have some spare change. That would be a great move.
2. DexCom
The global situation of diabetes is alarming. The prevalence of this chronic disease has been increasing for decades. Like most chronic diseases, the disease is difficult and inconvenient to manage, and hundreds of billions of dollars are spent each year on medical costs related to this disease. It is important to develop innovative technologies that can help diabetic patients achieve better outcomes.
DexCom offers such technology with its continuous glucose monitoring (CGM) devices that allow diabetics to monitor their blood sugar levels throughout the day. CGMs are superior to traditional blood glucose monitors (BGMs) for several reasons. Let’s mention two of them.
First, CGMs can automatically take measurements, even when patients are asleep. BGMs must be manually operated and only provide a patient’s blood glucose level at the precise moment of a test. Second, CGMs can automatically send alerts to patients, caregivers, and healthcare professionals when a person’s blood glucose level rises too high or falls too low, something BGMs cannot do. DexCom is one of two market leaders in CGMs.
Its financial results have been growing strongly for some time now. In the first quarter, revenue increased 24% from a year earlier to $921 million, and its adjusted earnings per share nearly doubled to $0.32.
What is the growth potential of this market? Consider that DexCom ended 2023 with 2.3 million customers. That’s not even close to 1% of the world’s half-billion adults with diabetes. And while DexCom doesn’t have access to many of these potential customers—since they live in countries where it doesn’t have a presence—the company has repeatedly stressed that even in the United States, it still has considerable room for growth.
Its addressable market will expand further as it enters new territories, as it always has. DexCom is trading at just under $113 per share at the time of writing, so investors can get eight shares for $1,000.
Don’t miss this second chance at a potentially lucrative opportunity
Ever feel like you missed the boat by buying the best-performing stocks? Then you’re going to want to hear this.
In rare cases, our team of expert analysts issues a “Double Down” Action Investors recommend companies that they believe are about to make their mark. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
Amazon: If you invested $1,000 when we doubled our efforts in 2010, you would have $22,254!*
Apple: If you invested $1,000 when we doubled our efforts in 2008, you would have $41,863!*
Netflix: If you invested $1,000 when we doubled our efforts in 2004, you would have $368,072!*
Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
*Stock Advisor returns as of July 2, 2024
Prosper Junior Bakiny has positions in Shopify. The Motley Fool has positions in and recommends Shopify. The Motley Fool recommends DexCom. The Motley Fool has a disclosure policy.
2 Growth Stocks to Buy with $1,000 was originally published by The Motley Fool
