The tech space may be facing its share of afflictions at the moment as a decline in customer and enterprise business spending spurred on by the ongoing challenges of the macro environment have taken their toll. Even so, strong businesses are making themselves known and continuing to grow steadily.
An investment in these types of companies now could pay off in robust shareholder returns over the next decade and beyond. Here are two smart tech stocks to buy that fit that bill that investors may want to consider scooping up before the month is out.
1. Pinterest
Pinterest (PINS -0.70%) has built its business on the power of advertising dollars. One of the things that makes Pinterest's platform so attractive to merchants as well as everyday consumers is the fact that it doesn't scream that it's an advertising machine, even though that's essentially what it is.
For users, the ability to gain inspiration for everything from cooking to fashion to home decor to travel and beyond, and the image-focused design of Pinterest's platform, lends itself to prolonged periods of enjoyable scrolling. Of course, many of the images and videos to be found on Pinterest's platform are actually ads that can easily turn what starts as a simple search into an actual purchase, which is great news for merchants.
2022 showed promise on a multitude of fronts for Pinterest. The company pulled in total revenue of $2.8 billion in the 12-month period, up 9% from 2021. This was driven by 8% revenue growth in its U.S. and Canada segment, 4% revenue growth in its Europe segment, and a whopping 52% revenue growth in the rest of the world segment in 2022 compared to 2021.
Pinterest closed out the final quarter of the year by turning a profit to the tune of $17 million. It also had a healthy $2.7 billion in cash and investments on its balance sheet at the end of 2022.
In a less volatile economic environment where ad spending isn't so heavily in flux, investors would likely be witnessing more striking growth figures on the company's balance sheet. However, even as ad spending has shrunk somewhat in past quarters, Pinterest is continuing to draw users to its platform -- which essentially translates to more eyeballs for merchants to advertise to.
So, as ad spending recovers, it follows that Pinterest's top and bottom lines will as well, and ultimately shares should follow.
2. Etsy
Etsy (ETSY 2.73%) is far from the only game in town when it comes to e-commerce stocks, but the novelty and size of its business differentiate it from the crowd. Few companies are focused entirely on the areas of handmade, unique, and vintage goods, and Etsy's bread and butter comes from these categories.
Given this fact, and Etsy's widening global footprint in key e-commerce markets like North America, the U.K., and Europe, management estimates the platform operates in a growing total addressable market worth roughly $2 trillion.
Even a more modest slice of that pie would translate to generous financial growth for Etsy and its shareholders over the long run. Management estimates that Etsy.com has penetrated about 3% of the online portion of this market already.
In short, the company still operates in a rapidly expanding yet underpenetrated segment of the e-commerce market. And because of the specialized focus of Etsy's platform and its family of brands, it has limited direct competition, which gives it a wide moat in a highly lucrative space.
Investors should also note that even as Etsy's year-over-year growth has been somewhat muted in recent quarters, its successive growth over the last few years is incredible.
Case in point: Etsy reported gross merchandise sales of $3 billion in the third quarter of 2022, which represented an eye-popping increase of 150% compared to the same quarter in 2019. And the company's revenue of $594 million in the three-month period was up 200% on a three-year growth basis.
Etsy's considerable moat, steady growth, and expanding user base (active buyers were up 100% on a three-year clip in the third quarter) could signal a long runway still ahead for this growth stock.
