1 Magnificent Growth Stock That Could Turn $250,000 Into $1 Million by 2030

Global e-commerce sales slowed sharply last year as consumer spending shifted toward necessities in response to high inflation, but digital retail should regain momentum when the economy improves. In fact, Ameco Research says business-to-consumer e-commerce sales will increase by 13.6% annually to reach $15 trillion by 2030.

That rising tide will lift many businesses, but Shopify (SHOP 4.60%) and its shareholders are especially well positioned to benefit. The stock has fallen 75% during the ongoing bear market, bringing its market capitalization down to $53 billion, but that figure could quadruple by 2030. At that pace, $250,000 invested in Shopify today would be worth $1 million by the end of the decade.

Here's what investors should know.

Shopify has a strong competitive position

Shopify is the market leader in e-commerce software. It outranks all peers in both market presence and user satisfaction, according to a recent report from research company G2. In fact, its technology powers about 16% of e-commerce websites on the internet, and its merchants accounted for 10% of U.S. e-commerce sales in 2022. Only Amazon took more market share.

Shopify has achieved that success for one simple reason: Its platform can simplify commerce and empower merchants, unlike any other solution on the market. It provides retailers with a single dashboard to engage buyers and manage their businesses across multiple sales channels. That includes online marketplaces like Amazon, social media platforms like Meta Platforms' Instagram, brick-and-mortar shops, and custom websites. Shopify also provides adjacent solutions that address everything from payments and financing to money management and taxes.

Shopify is executing on a strong growth strategy

Shopify has innovated rapidly in recent years. Since the pandemic started, the company revamped its point-of-sale (POS) software, debuted developer tools enabling brands to build custom digital storefronts, and integrated its platform with new sales channels like Walmart and TikTok. The company also launched a cross-border commerce solution that helps brands engage international buyers, and it continued expanding into new geographies.

But two growth opportunities stand out from the pack: logistics services and onboarding larger brands.

Logistics services: Shopify is ramping up the Shopify Fulfillment Network (SFN), a logistics system aimed at reducing cost and complexity across the supply chain. The SFN will give merchants access to freight, fulfillment, and returns services and allow them to guarantee two-day delivery across multiple sales channels. No other commerce company offers the same level of logistics support.

The SFN should make Shopify a more compelling option for businesses and extends the company's addressable market. Spending on e-commerce fulfillment services will grow at 14% annually to reach $272 billion by 2030, according to Grand View Research.

Onboarding larger brands: Shopify is growing upmarket with Shopify Plus, a more customizable commerce platform built for enterprises. Plus merchants accounted for 33% of monthly recurring revenue in the fourth quarter, up from 29% in the prior year. And a wave of recently launched products should help Shopify maintain that momentum, including two that are particularly noteworthy.

First, Shopify Audiences is a marketing software that uses machine learning to build audiences and measure campaign results. It integrates with ad networks owned by Alphabet, Meta Platforms, and Pinterest, allowing merchants to run targeted campaigns across web properties like Google Search, YouTube, and Instagram. Shopify Audiences should ultimately drive conversions and boost sales for merchants.

Second, B2B on Shopify is a suite of business-to-business commerce tools. Management says over half of existing Plus merchants could utilize B2B, and adding wholesale functionality to the platform significantly extends the addressable market. B2B e-commerce sales are expected to grow at 20% annually to reach $33 trillion by 2030, according to Grand View Research.

More recently, Shopify introduced Commerce Components, a service that allows enterprises to integrate their existing systems with specific Shopify products and services, such as storefront development tools, checkout technology, or even B2B and logistics solutions. In other words, Commerce Components allows enterprises to lean on Shopify without the hassle of migrating to Shopify Plus, allowing them to pick and choose the commerce infrastructure they need.

The case for fourfold returns by 2030

Shopify has a strong competitive position in the multitrillion-dollar retail e-commerce market, which is forecasted to grow at nearly 14% through 2030. Additionally, the company is branching into adjacent spaces, like fulfillment and B2B commerce. And those markets are also expected to grow at a double-digit pace through the end of the decade.

With that in mind, shares of Shopify currently trade at 9.4 times sales, a screaming bargain compared to their five-year average of 29.2 times sales and a reasonable price to pay considering the potential upside. If Shopify can grow revenue at 22% annually for the next seven years -- a reasonable estimate, given its annualized revenue growth of 53% over the last three years -- its share price could grow fourfold by 2030 without any change in its price-to-sales ratio. That's why this growth stock is a buy.

As a caveat, investors should remember that portfolio diversification is an effective way to mitigate risk. Investing $250,000 in a single stock only makes sense in the context of a multimillion-dollar portfolio. But the possibility of fourfold returns by 2030 is compelling for any sum of money.