2023 is winding down and it's a great time to look for stocks with big potential to boost your portfolio's returns. Here are three that have earned a place as favorites of mine.
Shopify
Topping my list is Shopify (SHOP 1.11%). The e-commerce platform is enjoying a bounce-back year. Shares have rallied 41% year to date, far outpacing the S&P 500's 10%.
What's behind the company's strength? It all starts with Shopify's platform, which helps merchants -- large and small -- build, run, and grow their online stores. The company hosts online storefronts for many sellers, from small businesses selling a handful of products to popular brands like Kylie Cosmetics, Heinz, Hasbro, Lindt, and Sephora. Shopify's software helps merchants get up and running quickly and facilitates customizations, payments, and fulfillment.
The company generated $1.7 billion in revenue in its most recent quarter (the three months ending Sept. 30), which was up 25% from a year ago. What's more, $500 million, or 29% of its revenue, came from subscriptions, which are a nice source of predictable revenue streams.
In addition to its strong sales figures, the company boasts a rock-solid balance sheet with nearly $5 billion in cash and a little more than $1 billion in debt. Furthermore, the company generates positive free cash flow.
In short, Shopify offers investors high-octane growth with underlying stability in its balance sheet and cash flow. That's a combination that shouldn't be ignored.
MercadoLibre
Next up is MercadoLibre (MELI 3.09%). This e-commerce platform focusing on the Latin American market is an up-and-coming star.
The company holds a major competitive advantage as it is a leading e-commerce platform in countries such as Brazil, Argentina, Columbia, Panama, and Costa Rica. In addition to its signature e-commerce platform, the company offers logistics and payment solutions through its Mercado Envios and Mercado Pago services, respectively.
What's more, as the Latin American economy continues to grow and as e-commerce continues to gain market share from traditional brick-and-mortar retail in the region, MercadoLibre stands to benefit. In its most recent quarter (the three months ending Sept. 30), the company recorded $3.8 billion in revenue -- an increase of 40% year over year.
Furthermore, MercadoLibre's profits are soaring. Net income nearly tripled year-over-year to $359 million in its most recent quarter, demonstrating that the company is capitalizing on its increased sales.
For investors, the rising profit and revenue make MercadoLibre a growth stock worth considering.
Coca-Cola
The last stock on my list is Coca-Cola (KO). This legendary soft drink innovator has endured a tough year, with its shares falling 12% year to date. However, the company's poor stock performance might offer long-term investors a great opportunity to accumulate shares of this American corporate icon on the cheap.
Coca-Cola's fundamentals remain strong. In fact, it recently reported a bumper quarter. Highlights included:
- $12 billion in revenue, up 8% year over year.
- $3.1 billion in net income, up 11% year over year.
- Increased sales volumes in each of the company's drink divisions.
What's more, the company increased full-year guidance for revenue and earnings per share.
In summary, the company is navigating a challenging economic environment with ease. Partly, that is due to hiking its prices to keep pace with inflation, commodity price increases, and rising labor costs.
From a financial perspective, that makes Coca-Cola stock an attractive option for investors. Shares trade at a price-to-earnings multiple of 23, which is a bargain when considering the company's three-year average of 28.
KO PE Ratio data by YCharts
Finally, value-oriented investors should also note that the company boasts a dividend yield of 3.2%. Moreover, the company has increased its dividend for 61 straight years -- making it a top dividend stock. In short, Coca-Cola looks like a screaming buy right now.
