2 No-Brainer Growth Stocks to Buy Now With $80 and Hold Long-Term

Investors should strive to find competitively advantaged businesses trading at reasonable prices, especially those with compelling growth prospects. Valuations have undoubtedly become less attractive over the past year, as the S&P 500 (^GSPC 0.32%) has sailed 27% higher. But there are still worthwhile buying opportunities to be found in the market.

For instance, Shopify (SHOP 1.61%) and Uber Technologies (UBER -2.39%) not only trade at reasonable valuation multiples, but also both stocks are relatively affordable at less than $80 per share.

1. Shopify

Shopify provides businesses with a turnkey solution for omnichannel commerce. Its platform unifies physical and digital storefronts, letting merchant manage orders and inventory from a single interface. Its software integrates with marketplaces, social media, custom websites, and mobile applications. Shopify also provides ancillary financial services like payment processing and financing, as well as solutions for marketing, logistics, and wholesale.

Merchants find that value proposition compelling, so much so that Shopify accounts for more than 10% of online retail sales in the United States. That makes it the second largest domestic e-commerce company behind Amazon. In addition, Shopify leads the market in e-commerce and omnichannel commerce software, meaning the company is well positioned to benefit as more retail and wholesale take place through digital channels.

Shopify reported strong financial results in the fourth quarter, beating estimates on the top and bottom lines. Total revenue increased 24% to $2.1 billion because of strong growth in the subscription and merchant services segments. Meanwhile, non-GAAP net income more than quadrupled to reach $441 million due to cost control efforts, including headcount reductions and the divestiture of its capital-intensive logistics business.

Management also discussed strong momentum in wholesale e-commerce, a relatively new focus for Shopify. Wholesale e-commerce is also referred to as business-to-business or B2B e-commerce, and Shopify saw gross merchandise volume in that category increase 150% in the fourth quarter. That is noteworthy because the wholesale e-commerce market is about three times bigger, and growing faster, than the retail e-commerce market.

Retail e-commerce sales are expected to grow at 11% annually through 2030, and wholesale e-commerce sales are forecasted to increase at 18% annually during the same period. But Wall Street expects Shopify to outpace both figures, growing sales at 22% annually over the next five years. That consensus estimate makes its current valuation of 13.9 times sales look quite reasonable. Investors with a five-year time horizon can buy a small position in this stock today without hesitation.

2. Uber Technologies

Uber earns revenue across three business segments: (1) mobility, (2) delivery, and (3) freight. Its mobility platform connects users with transportation, primarily ridesharing services, but it also includes rentals and taxis. Its delivery platform connects consumers with restaurants and convenience stores, letting them order food, groceries, and alcohol for pickup or delivery. And its freight platform connects shippers with carriers to provide on-demand logistics.

Uber benefits from an interesting network effect. Individually, its ridesharing and food delivery services become more compelling choices as participation increases. But the ecosystems are connected through a single mobile app, which creates cross-sell opportunities for Uber. In other words, the company can encourage ridesharing participants to engage with its food delivery service, and vice versa. Those cross-sell opportunities become more significant as each ecosystem expands, supercharging the underlying network effects.

Uber looked strong in the fourth quarter. Monthly active platform consumers increased 15% to 150 million. Revenue rose 15% to $9.9 billion, driven by strong growth in mobility and modest growth in delivery, offset by a decline in freight sales. On the bottom line, GAAP net income jumped 128% to $0.66 per diluted share as cost control efforts continued to show results.

Uber is well positioned to maintain that momentum. The company operates the largest U.S. ridesharing service, with 76% market share and the second largest U.S. food delivery service with 23% market share, according to Bloomberg. The same pattern holds globally, according to Argus analysts. That scale creates a durable economic moat -- not only because Uber benefits from the interesting network effect, but also because its platform generates data that lets the company dispatch and route drivers more efficiently over time. Advertisers can also use that data to target consumers on the platform.

With that in mind, the ridesharing market is forecasted to grow at 16% annually through 2030, and the online food delivery market is projected to expand at 19% annually during the same period. That puts Uber on a glidepath to annual sales growth in the mid-teens through the end of the decade, which makes its current valuation of 4.3 times sales seem quite reasonable. Patient investors should feel comfortable buying a small position in this growth stock today.