If you're looking to build wealth, the stock market is a great place to put your money. Equities are easier to buy than real estate, and they have outperformed bonds over the long term. In fact, the Vanguard Total Stock Market ETF is up 330% over the last 15 years, crushing the 68% return of the Vanguard Total Bond Market ETF.
With that in mind, here are two unstoppable stocks that you can buy at a bargain today.
In terms of web traffic, Etsy (ETSY -0.57%) is the fourth most popular online marketplace in the United States, and the eighth most popular e-commerce retailer worldwide. To achieve that success, Etsy has built its business around small sellers, creating a marketplace that specializes in handmade, vintage, and other unique goods. In fact, many products sold on Etsy can even be customized or personalized for the consumer.
That value proposition has made Etsy the go-to marketplace for 90 million buyers and 5.3 million sellers, creating a significant network effect. Each new buyer brings more purchasing power to the marketplace, incentivizing sellers to join; in turn, each new seller brings more inventory to the marketplace, incentivizing buyers to join. To supercharge that flywheel, Etsy provides several value-added services for its sellers, including advertising tools and discounted shipping labels.
In short, the company has differentiated itself from other online marketplaces and big box retailers, and that competitive edge has led to impressive financial results. In 2021, Etsy's take rate -- revenue as a percentage of gross merchandise sales (GMS) -- rose to 17.3%, up from 16.8% in 2020, evidencing the company's pricing power. In turn, revenue jumped 35% to $2.3 billion and earnings rose 26% to $3.40 per diluted share.
Last year, Etsy's GMS hit $13.5 billion. That's 31% higher than the prior year, which is certainly impressive considering that Etsy grew GMS by 107% in 2020. However, that figure still accounts for less than 3% of its $466 billion total addressable market (TAM), leaving a long runway for growth. In short, Etsy has a differentiated business model and a massive market opportunity, yet shares are trading at 8.1 times sales, well-below their three-year average of 12.1 times sales. That's why this growth stock looks like a bargain.
2. Fiverr International
Fiverr (FVRR -7.95%) is a key player in the growing gig economy. Its marketplace connects businesses and freelancers, and it lists over 550 categories of digital services across nine verticals, including digital marketing, programming, and writing. To reinforce its value, Fiverr provides a number of value-added services for gig workers, including tools for advertising, task management, and learning and development.
Collectively, its broad catalog and product portfolio have fueled impressive financial results. Of particular note, Fiverr's take rate -- revenue as a percentage of gross merchandise value (GMV) -- rose 210 basis points to 29.2% last year. To put that in perspective, rival Upwork posted a take rate of just 14% in 2021. In turn, Fiverr's revenue rose 57% to $297.7 million and free cash flow skyrocketed 171% to $35.5 million. And shareholders have good reason to believe it can maintain that momentum.
Currently, Fiverr puts its market opportunity at $115 billion, yet with a GMV of just $1 billion in 2021, the company has captured less than 1% of its TAM. To capitalize on that, management has outlined an ambitious growth strategy that centers, in part, on bringing more buyers to the platform and moving up market.
Fiverr spent $95 million to acquire Stoke Talent last year, a freelancer management platform designed to help bigger businesses onboard, pay, and handle compliance issues. Better yet, by adding Stoke to its portfolio, Fiverr can now offer services to businesses that already have a freelancer workforce, even if they work offline. That matters, because the offline freelancing market is still much larger than the online market.
Looking ahead, the gig economy is expected to grow rapidly as more workers opt for the freedom and flexibility provided by the freelancing lifestyle. In fact, there will be 90 million gig workers in the U.S. alone by 2028, up 33% from 68 million in 2021, according to Statista. Put another way, more than half of the entire U.S. workforce will be part of the gig economy in seven years' time.
Like Etsy, Fiverr is a key player in a growing industry. With shares trading at 9.8 times sales, well below their three-year average of 20.1 times sales, this growth stock looks like a bargain buy.