You don't need a lot of money to start investing, and thanks to the power of compounding, a little bit can go a long way in the stock market -- especially if time is on your side.
The average American's tax refund is about $3,000, and if you're expecting to get that kind of refund this spring or have that kind of money to invest now, you may be able to turn it into $10,000, $20,000, or even $50,000 with the right stocks.
Keep reading to see two tech stocks that could give you multibagger returns over the coming years.
1. MercadoLibre: A Latin American e-commerce juggernaut
MercadoLibre (MELI 3.09%) would likely get significantly more attention from investors if it were an American company, but that makes the under-the-radar Latin American growth stock all the more appealing.
The company is the leading e-commerce platform across Latin America, making most of its revenue from Brazil, Argentina, and Mexico. MercadoLibre benefits from a diversified business model, selling both directly to consumers online and hosting a third-party marketplace. Its digital payments business, MercadoPago, has grown rapidly thanks in part to its focus on brick-and-mortar business through its point-of-sale machines.
It also has its own logistics business, Mercado Envios, and is growing through lending and asset management segments as well.
For an e-commerce business, MercadoLibre's recent results have been particularly impressive as it hasn't experienced the e-commerce headwinds that many of its American peers have. In the third quarter, currency-neutral revenue jumped 61% to $2.7 billion, and the company has seen profitability significantly improve as higher-margin businesses like ads and Mercado Credito scale up, helping it deliver an 11% operating margin in the most recent quarter.
MercadoLibre said revenue from its ads business nearly doubled in its most recent quarter, and the company only recently stepped up investments in its ad product, a sign that growth could accelerate. Considering Amazon's success with its advertising business, advertising could be a huge profit stream for MercadoLibre as well.
Finally, the e-commerce stock looks well priced, down roughly 60% from its peak in 2021. Its profitability is ramping up quickly, and it's penetrating a huge market with an expanding middle class in Latin America. The future looks bright for MercadoLibre.
2. Perion Network: An undervalued adtech player
The digital advertising industry was hit hard by the macroeconomic slowdown with heavyweights like Alphabet and Meta Platforms seeing growth rapidly slow. However, Perion Network (PERI 0.76%), a small-cap adtech stock, continued to put up impressive growth.
The company just reported preliminary fourth-quarter results, showing it's bucking any broader headwinds in the advertising industry. Revenue in the fourth quarter increased 30% to $205 million, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) jumped 63% to $47 million, giving it an adjusted EBITDA margin of 23% or 53% excluding traffic acquisition costs, or its media buys to place its ads. Management also said the number of publishers using its platform rose 25% to 260.
Perion operates primarily through its intelligent hub, connecting ad sellers such as publishers and ad buyers such as brands, to optimize ad buys, and make the market more efficient. The company also provides premium ad features including a connected cart, allowing viewers to scan a QR code on a connected TV ad in order to purchase a product, or picture-in-picture advertising to air ads during live events, such as sports.
Perion also has its own cookieless tracking technology, SORT, which positions it nicely to gain market share as Google deprecates third-party cookies.
Finally, the stock is surprisingly cheap considering its growth and profitability, trading at a price-to-earnings ratio of less than 16, or less than 10 times adjusted EBITDA.
After proving itself in a challenging environment, Perion looks well positioned to outperform the market given its growth rate and valuation.
