Fears of recession and a challenging macro environment have pummeled stocks across virtually every industry in recent months. While it's unclear whether the current economic situation will eventually teeter into a recession, there's no denying that many companies -- particularly growth-oriented businesses -- face some particular hurdles in the current moment.
Nonetheless, those with sticky business models providing valuable products and services to their target consumers, and doing so under the purview of strong leadership with a solid strategy for long-term growth, can emerge on the other side and generate portfolio wins for shareholders.
Here are two such stocks with parabolic potential that investors can consider buying in 2023 and holding for at least the next five to 10 years.
1. Shopify
The pandemic fueled an incredible streak of growth for Shopify (SHOP -2.35%) and its shareholders, but that doesn't mean the best days are over for this stock. The economic volatility of the last few years, the rise of remote working arrangements, and importantly, the explosive growth of the e-commerce industry as a whole have inspired an increasing number of people to take the future into their own hands and launch an online business.
Shopify's platform is unique compared to many other popular e-commerce platforms in that it not only allows individuals with any level of experience to start and grow a company (online and offline) but to truly differentiate their business as its own, defined brand. Its array of plug-ins and apps help merchants manage everything from billing to sourcing inventory to order fulfillment.
Moreover, its growing Shopify Fulfillment Network (SFN) is increasingly shortening processing and delivery times (as of the third quarter, more than 65% of SFN orders had predicted delivery of two days or less). The distinct value proposition that the company offers business owners gives it a prolonged competitive advantage that investors can also capitalize on.
While revenue growth has decelerated from the height of the pandemic, a normalization was to be expected once the world reopened. Even so, the company's revenue totaled $1.4 billion in Q3 2022 and has grown at a whopping 52% compound annual rate over the past three years -- and 22% over the past year alone. Shopify remains one of the most popular e-commerce platforms in the world, accounting for roughly one-fifth of all e-commerce sites worldwide built using its technologies.
This dominant market position, combined with its aggressive efforts to build and retain its merchant base (ranging from fulfillment network investments to the introduction of new tools that make cross-border transactions easier than ever) creates a compelling value proposition for long-term investors too. For those with a buy-and-hold horizon of at least three to five years, right now could be an excellent time to scoop up this top growth stock while it's still trading at a discount.
2. Etsy
Etsy (ETSY -2.17%) has a different approach than Shopify to the fast-growing e-commerce space, which nonetheless creates an intriguing opportunity for long-term investors. Where Shopify's advantage is that it helps merchants create and build a unique brand, Etsy operates as a marketplace where sellers around the world can market unique, handmade, and vintage items to a global base of buyers.
The focus of Etsy's platform is undoubtedly more narrow than some other e-commerce sites, but this is an advantage of its own. Virtually no other company operates in this particular space at the scale that Etsy does. And the platform's focus on specialty and vintage items faces a vast addressable market opportunity, one that Etsy estimates could be worth as much as $2 trillion.
With an easily scrollable interface and a vast array of product categories that feature items many consumers will be hard-pressed to find anywhere else, Etsy has an edge in this space that it can continue to capitalize on in the years ahead. As of 2021, 15 of the product categories on Etsy had more than one-million unique buyers.
Even as less favorable year-over-year comparisons have shown decelerated growth, Etsy continues to deliver remarkable growth figures on a multitude of fronts from pre-pandemic levels, which, arguably, offer a far more accurate picture of its durable growth advantage than the the heightened streak of growth witnessed during the peak of the pandemic.
In Q3 2022, Etsy's gross merchandise sales of $3 billion were up by an incredible 150% compared to Q3 2019. Meanwhile, active buyers were up 100% on a three-year basis, while its cohort of repeat buyers rose by a notable 125% when compared to Q3 2019.
Etsy's market opportunity and continued successes in a more normalized growth environment portend well for its future trajectory, and investors may want to buy in now as its shares could easily jump as growth stocks emerge from bear territory.
