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2 Top Growth Stocks New Investors Should Buy in 2022

By Trevor Jennewine – Jan 4, 2022 at 6:05AM

Key Points

  • Rather than looking to get rich quick, adopt a long-term mindset when building your portfolio.
  • Shopify provides a range of software and services that help merchants manage an omnichannel business.
  • Block makes digital financial services more accessible for merchants and consumers.

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These companies are the building blocks of a market-beating portfolio.

Getting started in the stock market can be intimidating. With so much to learn and so many companies to research, it's easy to get overwhelmed. My best advice is to read as much as possible, even if you disagree with the author. In fact, you should always consider both sides of any argument. Doing so will help you build stronger investment theses.

Beyond that, I would offer another piece of advice: Invest in companies that you think will leave a lasting impact on the world. The market can be volatile over short periods of time, but a long-term mindset helps blunt the impact of that volatility. For example, companies like Shopify (SHOP 0.45%) and Block (SQ 3.46%) have already reshaped the world, but both stocks still look like worthwhile investments.

Person sitting on their bed and engaged with their computer while holding a credit card.

Image source: Getty Images

1. Shopify

Shopify is the retail operating system for more than 1.7 million businesses worldwide. Its software-as-a-service platform helps merchants manage sales across physical and digital storefronts, including custom websites, online marketplaces, and social media platforms. In fact, Shopify has introduced new integrations or expanded its relationship with several brands in the past year, including Alphabet's Google, Meta Platform's Facebook, and TikTok. 

Likewise, Shopify also provides a range of additional services, including payment processing, discounted shipping, and marketing tools, each of which makes its value proposition more compelling for merchants. In short, Shopify offers a comprehensive solution for modern, omnichannel commerce. And the breadth of its portfolio has made it the most popular e-commerce software in the world, as it currently powers 27% of e-commerce websites on the internet.

Not surprisingly, Shopify has posted impressive financial results over the past three years.


Q3 2018

Q3 2021


Revenue (TTM)

$952.2 million

$4.2 billion


Free cash flow (TTM)

($25.8 million)

$458.2 million


Source: Shopify SEC filings, YCharts . TTM = trailing-12-months. CAGR = compound annual growth rate.

Of particular note, more merchants are adopting services like Shopify Payments, Shopify Shipping, and Shopify Capital, a trend that translates into higher switching costs. Put another way, businesses are becoming increasingly dependent on Shopify, and with each new product it becomes more difficult for a merchant to cut ties with the company.

Going forward, that competitive edge should be a powerful growth driver, and management's ambitious growth strategy -- which centers around international expansion, the Shop mobile app, and the Shopify Fulfillment Network -- should help the company capitalize on its massive market opportunity. That's why this stock looks like a smart long-term investment.

2. Block

Block (formerly known as Square) is disrupting the financial system, making it less costly and less complex to participate in the economy. The company breaks its product portfolio into two segments: the seller ecosystem for merchants and the cash app ecosystem for consumers.

The seller ecosystem is designed for commerce. It provides merchants with all of the hardware, software, and services needed to manage a business across physical and digital channels. That includes tools for payment processing, employee management, customer loyalty, and more. Similarly, the Cash App ecosystem is designed for personal finance. It blends banking and brokerage services, allowing consumers to deposit, send, spend, and invest money through a single platform.

In both cases, Block has seen strong demand for its products, and that has translated into an impressive financial performance over the past three years.


Q3 2018

Q3 2021


Gross profit (TTM)

$1.2 billion

$4.0 billion


Free cash flow (TTM)

$70.8 million

$643.4 million


Source: YCharts. TTM = trailing-12-months. CAGR = compound annual growth rate.

Of particular note, mid-market sellers (i.e. those with over $500,000 in annual sales) comprised 37% of gross payment volume (GPV) in third quarter, up from 28% two years ago. That means Block is expanding up-market, which has positive implications for its future growth prospects. By definition, larger businesses bring in more revenue, and Block makes money by taking a cut of GPV. Likewise, larger companies tend to be more stable, meaning they are less likely to churn due to business failure.

More broadly, Block's seller ecosystem simplifies commerce. There are no long-term contracts, and all the necessary infrastructure is provided through a single self-service platform. With a value proposition like that, the company should continue to thrive. That's why stock looks like a market-beating investment in the long run.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Trevor Jennewine owns Block, Inc. and Shopify. The Motley Fool owns and recommends Alphabet (A shares), Alphabet (C shares), Block, Inc., Meta Platforms, Inc., and Shopify. The Motley Fool recommends the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify. The Motley Fool has a disclosure policy.

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