2 obvious actions to buy now and keep forever

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Investment ideas can come from many places, but I often start by considering high impact global trends. For example, e-commerce has changed the world, providing consumers with convenience, while enabling businesses to scale globally (almost) overnight. More importantly, this trend is far from being played out.

Last year, consumers spent $ 4.2 trillion online, but that figure represented just 17.8% of global retail sales, according to eMarketer. However, this number will increase in the coming years, which means that investors still have a chance to take advantage of the e-commerce market share. With that in mind, here are 2 obvious stocks to buy now and keep forever.

Image source: Getty Images.

1. Etsy

Etsy (NASDAQ: ETSY) is an e-commerce marketplace for handcrafted and vintage products. It connects buyers to millions of creative sellers, helping them find the types of specialty or even personalized items that can’t be mass produced by big box retailers. Plus, Etsy has something for everyone, as its diverse inventory ranges from home furnishings and decor to clothing and beauty products.

Generally speaking, this sets Etsy apart from its competitors. Its brand name has become synonymous with unique products, and this recognition has made it the 8e– the world’s most popular e-commerce platform, outclassing the likes of Pinduo and Target.

To reinforce this advantage, management has focused on improving search and discovery, making it easier for buyers to find the products they are looking for on the platform. For example, Etsy recently rolled out new artificial intelligence models to better personalize landing pages and make recommendations that are more relevant to each shopper. These efforts have already boosted conversion rates and repeat purchases, and they have caused an increase in ad spend for sellers on the platform.

In turn, Etsy’s financial performance has been impressive over the past three years.

Metric

Q2 2018 (TTM)

Q2 2021 (TTM)

TCCA

Returned

$ 496.0 million

$ 2.1 billion

63%

Free movement of capital

$ 109.0 million

$ 684.3 million

84%

Source: YCharts. TTM = 12 rolling months. CAGR = compound annual growth rate.

Looking ahead, management assesses its market opportunity at $ 437 billion by 2023. To put that in perspective, Etsy’s gross merchandise sales totaled $ 12.4 billion in the past 12 months. , which represents less than 3% of the company’s addressable market.

To take advantage of this opportunity, Etsy recently acquired the Brazilian marketplace Elo7, expanding its presence in Latin America, the fastest growing region of the world in terms of e-commerce sales. And soon after, Etsy also acquired Depop, a fashion resale marketplace popular with Gen Z consumers; this initiative expands Etsy’s presence in the apparel industry, the fastest growing vertical in the e-commerce industry.

More generally, management remains focused on improving research and discovery, and building trust between buyers through transparent delivery times and better customer support. Collectively, these growth initiatives should help Etsy gain market share in the years to come. This is why this stock looks like a no-brainer.

2. Shopify

Shopify (NYSE: SHOP) mission is to improve trade for all. Its software helps traders run their businesses across physical and digital locations, integrating orders from online marketplaces, social media platforms, and personalized websites into a single point-of-sale system. Shopify also complements its software with services including payment processing, discounted shipping, and financing, as well as an app marketplace that offers thousands of integrations.

In short, Shopify provides an end-to-end solution for modern omnichannel commerce, helping customers deliver compelling customer experiences in any environment, on any device. And this value proposition resonates with merchants, as Shopify now powers 1.7 million businesses globally, up 113% from 2018. In fact, Shopify is the software platform for e-commerce. most popular in the world, holding a 26% market share. .

Unsurprisingly, this strong competitive position has helped Shopify achieve impressive financial results in recent years.

Metric

Q2 2018 (TTM)

Q2 2021 (TTM)

TCCA

Returned

$ 853.6 million

$ 3.9 billion

65%

Free movement of capital

($ 31.5 million)

$ 507.0 million

N / A

Source: YCharts. TTM = 12 rolling months. CAGR = compound annual growth rate.

To further strengthen its competitive position, management is aggressively investing in the Shopify Fulfillment Network, a collection of robotic warehouses across the United States. This infrastructure will allow Shopify to select, package, and ship inventory on behalf of its merchants, helping them deliver products faster and at lower cost.

Shopify is also investing in the Shop mobile app, a product launched in April 2020. This tool helps consumers discover new brands, track orders, and make purchases, and it allows merchants to engage shoppers with automated advertising campaigns. In total, the Shop app already has 107 million registered users.

Finally, Shopify recently launched Shopify Markets, a centralized hub designed to help merchants increase sales in international geographies. Collectively, these growth initiatives should allow Shopify to maintain its momentum and further seize its $ 153 billion market opportunity. That’s why this action looks like a smart buy right now.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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