A new year is upon us, and with that another year to continue building a portfolio around great stocks with long-lasting growth potential. No one can say what 2023 has in store for investors, and there may be more volatility ahead, but those who play the long game can keep investing in wonderful companies in any market environment.
If you are going stock shopping in January, here are two top growth stocks to consider buying that may be beaten down but are anything but out.
1. Shopify
Shopify (SHOP -2.37%) experienced a supercharged bout of growth in the earlier days of the pandemic, and some investors may have expected that lightning pace to continue indefinitely.
However, it makes sense that Shopify would see a more muted pace of growth compared to the height of the pandemic when people were shopping online at unprecedented levels as much of daily life ground to a screeching halt. Meanwhile, compared to pre-pandemic levels, Shopify continues to make tremendous strides as it builds out its network of solutions for its global merchant base.
The company's third-quarter revenue of $1.4 billion represented merely a 22% increase from the prior-year period, but it was up more than 350% on a three-year clip. Shopify's merchant solutions and subscription solutions revenue increased by 340% and 127%, respectively, in the third quarter of 2022 compared to the third quarter of 2019. Meanwhile, gross profit dollars and gross merchandise volume surged by 206% and 212%, respectively, on a three-year basis.
Over the trailing 12 months, Shopify has seen its revenue grow at a solid clip of about 14%. Although its bottom line is improving, the company is still operating at a net loss, largely due to its focus on investing in the growth of its business right now in order to pave the way for prolonged returns in the future. Shopify is one of the leading e-commerce platforms in the world, making it simple for anyone, regardless of their experience, to start and build an online business.
Its dominance of this space, continued financial growth, and ongoing strides to fine-tune the merchant experience (such as the buildout of its Shopify Fulfillment Network, which is making it easier than ever to get products to customers) are all green flags for the e-commerce stock's future growth story. Investors can also benefit from this growth story, provided they have the patience to wait out what is undeniably a difficult period for growth stocks in general.
2. Fiverr International
Fiverr International (FVRR -2.00%) may not be wowing investors with its share price returns right now, but the business is still going strong on a variety of fronts. The rise of remote and freelance work was already underway well before the pandemic, although this period certainly accelerated these trends. As one of the world's leading freelance platforms connecting everyone from individuals to Fortune 500s with talented freelancers across virtually every service sector imaginable, Fiverr was well-positioned to benefit from these trends.
Now, as the lightning growth levels of the pandemic recede into memory, the rise of the gig economy is nowhere close to slowing down. This also bodes well for Fiverr, which is continuing to see favorable growth, increasing its take rate, and drawing new buyers to its platform even in an environment where fears of a recession are rampant and many companies are slowing down or stopping hiring for the time being.
For businesses, one of the many benefits of hiring a freelancer either for a one-time project or an ongoing partnership is that these arrangements don't incur the same overhead costs or obligations that a traditional employer-employee relationship does. And for the freelancers tendering these services, gig work can provide a lucrative means of supplementing or even replacing a full-time income, which is all the more attractive in a difficult economic environment.
Over the trailing three-year period, Fiverr grew its revenue and cash from operations by respective amounts of 60% and 122%. And as of the third quarter, its take rate -- the amount it holds back from transactions on its platform -- was continuing to rise at a solid clip, up 160 basis points year over year to a whopping 30%.
As of 2022, estimates show that nearly 36% of all workers in the U.S. freelance. However, it's estimated that nearly 51% of the entire U.S. working populace will freelance by the year 2027. For tech investors who want to capitalize on the future and changing dynamics of the world of work, Fiverr's steadily growing business and place in the global freelance market make it look like an ideal place to start.
