Market swings like we have been seeing in March and April 2025 can make investors hesitant to put money to work in stocks. But as long as you're investing with a long-term mindset in stocks of growing companies, you're setting yourself up for tremendous returns over time.
Shopify (SHOP 1.23%) and Chewy (CHWY 3.04%) are two companies that entered the year with momentum and still have huge opportunities to expand in e-commerce. Here's why these two unstoppable stocks could make rewarding investments for the next decade.
1. Shopify
Shopify has become the go-to platform for merchants to set up and manage their e-commerce operations. It's very ubiquitous. Last year, over 875 million unique shoppers made a purchase with a Shopify merchant. Yet even after delivering monster returns over the last decade, the company is still growing at high rates that should fuel market-beating returns over the next 10 years.
NASDAQ: SHOP
Key Data Points
Revenue grew 26% last year and accelerated to 31% year over year in the fourth quarter. Most of the company's $9 billion in annual revenue is generated from merchant solutions, such as payment processing fees and other services. This is fueling a strong free cash flow margin, while also aligning Shopify's success with its merchant customers.
Shopify's growth is highly dependent on the success of its merchants, creating a good relationship between the company and its customers. If merchants make more sales, it fuels more payment processing fees and revenue. But Shopify also has a huge opportunity to grow revenue by reaching more merchants worldwide. Its 2024 gross merchandise volume of $292 billion is less than 5% of the global e-commerce market, and the market is still growing.
Shopify is positioning itself to be a major beneficiary of artificial intelligence (AI). It has a partnership with Perplexity to power the AI company's search results. This allows Perplexity users to research products they are interested in and make a purchase conveniently with a Shopify merchant. Shopify could potentially reach a similar deal with OpenAI's ChatGPT.
Given the enormous upside in the e-commerce market, Shopify will likely be growing for years to come. Investors that stick with the stock should earn excellent returns.
2. Chewy
Chewy has positioned itself as a leading online pet store brand, and its investments in pet healthcare and clinics are widening its lead and creating a more sticky relationship with pet owners.
NYSE: CHWY
Key Data Points
Chewy's stock price is down well off its highs from a few years ago. Higher inflation and lower consumer spending slowed its revenue growth, but it's starting to ramp up its growth again. It finished 2024 with revenue up 15% year over year in the fourth quarter.
Chewy could see growth slow in a recession, but that will mostly impact its ability to win new customers in a sluggish consumer spending environment. Existing customers that regularly shop with Chewy are still going to have to buy pet food and other products for their furry family members. Pet ownership trends are looking favorable for Chewy among younger generations, so the business will have ample opportunity to grow over the long term. The key is to continue building brand awareness and keep expanding its service offering to fend off competition.
Importantly, Chewy already has a loyal customer base of 20 million that spent an average of $578 last year. Average spending per customer has increased every year from $434 in 2021. This indicates high customer satisfaction.
It's also beneficial for Chewy that over 80% of annual sales are generated from its autoship program, where customers can have their preferred pet food automatically shipped every month.
Repeat customers and investments in pharmacy and opening vet care clinics could deepen relationships with customers. These healthcare services should also generate much higher margins than retail sales, which could benefit the stock significantly over the next decade.
The stock's current valuation of 1.36 times trailing sales doesn't seem to reflect the company's long-term potential. If Chewy continues to have success with its non-retail pet services, the stock could soar.
