Some of the world's largest and most promising publicly traded companies have stocks selling at what many consider to be bargain prices. But what defines a bargain? It's important to remember that share price alone offers an incomplete picture as to a company's true value and reveals little about the stock itself -- either good or bad. You have to look beyond the share price at the underlying business to determine what counts.
For long-term investors, the current bear market offers up opportunities to buy shares of incredible businesses at great discounts, if you can distinguish the bargains from the value traps. Let's take a look at two of the opportunities and find out why they are fantastic stocks with monster growth potential to buy right now.
1. Shopify
Shopify (SHOP 0.14%) made starting an online business or launching an online store for an existing brick-and-mortar retail brand easier, even for those with little to no experience running their own company. From running ads to locating suppliers to managing order fulfillment, Shopify's endless array of apps, plug-ins, and integrated services are designed to meet the full spectrum of needs facing business owners in a competitive retail and e-commerce landscape.
There are many factors that contribute to a brand's success in the digital age, but the ability to scale and to consistently ensure the smooth fulfillment of orders are two key elements. Shopify is building out its solutions and services for merchants in these two areas. The company recently launched Shopify Markets Pro, a product designed to make cross-border selling easier than ever while helping manage vital aspects like global tax compliance and accepting payments in local currency.
Shopify's ongoing network integration of Deliverr, which it purchased last July for $2.1 billion, is already expanding merchant adoption of its fulfillment services. President Harley Finkelstein said in the third-quarter earnings call:
"The combined scale of [the Shopify Fulfillment Network] and Deliverr allows us to consolidate volume, streamline operations and expand our carrier relationships. This unified network will enable Shopify to operate a small number of regional hubs that will serve several functions, including cross-docking, multichannel distribution, inventory balancing and some local fulfillment."
The company is also working on developing a new fulfillment app for Shopify merchants as it builds its new-and-improved network solutions. Meanwhile, orders fulfilled by Shopify's warehouse management software rose 450% year over year in the third quarter on the heels of these fulfillment network buildout initiatives.
Shopify is growing revenue steadily, and while the company is still operating at a net loss, management has said the company will focus on returning to profitability in the near future, but is focused on investing in the company's future in the present period. For patient long-term investors planning to hold the stock for three-to-five years, Shopify has a considerable runway of growth ahead of it. That could make its current discounted share price worth a second look.
2. Costco
Costco Wholesale (COST -0.55%) is a long-standing stalwart in the retail space, one that has withstood many market and economic cycles in its time while continuing to enrich investors. Costco's wholesale club and membership-based business model are significant drivers of this resilience.
It makes sense when you think about it. Offering access to select name-brand (and quality store brand) clothing, food, and toys to tech products, home decor, and healthcare products at discounted prices is a compelling concept in any market environment. In a recessionary environment, the value of this model for the end consumer becomes increasingly apparent. It's part of what has allowed Costco to capture roughly 56% of the wholesale club market, more than any other big-box retailer in the industry.
Costco has an enviable track record of growing revenue and earnings, and enriching shareholders in the process. The company's considerable market share and still expanding global presence -- Costco currently has a network of 848 warehouses around the world and approximately 121 million members -- helped it excel while other retailers struggled to stay profitable.
Over the trailing decade, Costco has grown its top line by 116%. In that same period, its net income has risen 187% and cash from operations is up by 115%. The trailing 10-year period has seen shareholders experience a total return of more than 500%. For investors seeking a tried-and-true retail stock to buy and hold for the long term, and one that pays a dividend to boot, Costco should definitely go on your list of income stocks to consider buying right now.
