Market Correction: 2 Top Growth Stocks to Buy Right Now

In the early days of the pandemic, the S&P 500 fell over 30% in less than 30 days, then it promptly rebounded as Congress approved a sweeping stimulus package and the Federal Reserve started buying debt at an unprecedented pace. By the end of 2020, the S&P 500 was up 16.3%, and the index delivered an even more impressive performance in 2021, climbing 26.9%.

In total, congress and the Federal Reserve injected over $9 trillion into the economy. And while those funds certainly contributed to the strong economic rebound, business closures still wreaked havoc on supply chains, causing inventory shortages (and price increases) across numerous industries. That snowballed into rampant inflation, which itself has weighed on investor sentiment and sparked a market correction. The S&P 500 currently sits 12% below its high, and many growth stocks have fallen much further.

Image source: Getty Images.

While those losses are undeniably painful in the short term, there is a silver lining for long-term investors: Every time the stock market has crashed, it has eventually rebounded and gone on to hit new highs. For that reason, now seems like a good time to buy a few shares of Shopify (SHOP -2.01%) and The Trade Desk (TTD -0.49%).

Here's what you should know.

1. Shopify

Shopify makes commerce easy. Its platform gives merchants all the tools they need to run a business across brick-and-mortar and digital locations. That includes everything from point-of-sale systems and marketing tools to payment processing and shipping services. Driven by the comprehensive approach, Shopify has steadily gained market share. It powered 10.3% of U.S. e-commerce sales in 2021, up from 5.9% in 2019. Only Amazon has more market share, but Shopify actually has an edge over the retail giant.

Amazon pulls third-party sellers onto its marketplace, and it even competes against them in some cases. But Shopify helps its merchants grow their own brand across numerous channels, such as online marketplaces (including Amazon), social media platforms, and custom websites. And its merchants-centric business model has brought over 2 million businesses to its platform, which has fueled an impressive financial performance over the past three years.

Source: YCharts. CAGR = compound annual growth rate.

Looking ahead, shareholders have good reason to be excited. In 2021, Shopify continued to build its robot-powered fulfillment network. The company expects fulfillment volume to scale in late 2023 and 2024, and management says the Shopify Fulfillment Network (SFN) will ultimately allow merchants to deliver products in two days or less to 90% of the U.S. More broadly, by democratizing fulfillment, the SFN should help Shopify continue to gain market share.

In 2021, e-commerce spend hit $5.5 trillion, but that figure accounts for just 20% of total retail spend, according to eMarketer. In the coming years, as online shopping becomes more even more popular, Shopify should benefit. And with the stock down 68% from its high, shares are trading at 15 times sales -- near their cheapest valuation in the past three years. That's why now looks like a good time to buy this growth stock.

2. The Trade Desk

The Trade Desk operates the leading independent demand platform (DSP) in the ad tech industry. Its programmatic tools automate the ad buying process, replacing manual negotiations with real-time bidding. That allows marketers to spend their budgets more efficiently, as they can create and optimize data-driven campaigns across digital channels like display, social, mobile, and video -- all from a single platform.

Better yet, The Trade Desk leans on artificial intelligence to help clients target content more effectively, using data captured from each ad impression to drive clicks and conversions. Additionally, its platform is built on bid factors, while every other competitor uses line items to value ad impressions. What's the difference? Bid factors are a far more granular way to define desirable traits when targeting ads, meaning marketers can achieve campaign goals more efficiently.

Fueled by that competitive edge, The Trade Desk has kept over 95% of its clients for the last eight years, and the company has delivered impressive financial results like clockwork.

Source: YCharts. CAGR = compound annual growth rate.

According to eMarketer, total ad spend reached $780 billion in 2021, but just $491 billion (63%) of that total was spent on digital ads, and only $155 billion (20%) was transacted programmatically. In other words, The Trade Desk already has a sizable market opportunity, and it will get even bigger as programmatic technology sees greater adoption.

More importantly, The Trade Desk is the third-most-popular DSP, behind only Alphabet's Google DV360 and Amazon DSP, according to Advertiser Perceptions. But of the three, only The Trade Desk is independent, meaning it's not affiliated with any content and therefore has no reason to steer ad buyers toward a particular website, search engine, or mobile app. In other words, the company has an edge because its values are better aligned with its clients.

Currently, The Trade Desk stock sits 49% below its all-time high. And with a reasonable valuation of 23.7 times sales, now looks like a good time to pick up a few shares.