Investing in growth stocks can be a great way to create wealth. Just ask anyone who bought Amazon stock a decade ago (it’s up more than 1,000% over the last 10 years).
Recently, I’ve been buying a few growth stocks myself. Here’s a look at two exciting companies I’ve been investing in.
The future of mobility
First up, we have Uber (NYSE: UBER). It’s a major player in the mobility and food delivery markets.
I first bought this stock last year when it was in the low $40s. So, I’ve done well from it already.
However, I wanted to increase my position and make a bigger bet on the company. So, when it pulled back recently, I bought more shares and significantly increased my holding.
I’m bullish on Uber for a number of reasons.
In the short term, I like the fact that the company’s profits are soaring. This year, Uber’s earnings per share are forecast to rise about 50%. Next year, analysts expect growth of about 60%.
Meanwhile, in the long term, I’m excited about the potential for robotaxis. Just imagine what could happen to Uber’s profits if there were no drivers in its vehicles.
Now, a risk here is competition from Tesla in the robotaxi space. This is one reason the stock has pulled back recently.
I’m backing Uber to be successful on this front though. It has a first-mover advantage (it already has robotaxis on the road in some US cities, in partnership with Google’s Waymo), a very strong brand name, and a huge global user base.
Powering the online shopping revolution
Another stock I’ve been adding to is Shopify (NYSE: SHOP). It operates one of the world’s largest online shopping platforms.
This stock is still a relatively small holding for me. I’ve kept the position size small because Shopify’s share price is very volatile and I don’t want its volatility to have a huge impact on my portfolio.
I’m excited about the company’s potential though.
Today, new retail brands are popping up everywhere and a lot of them are turning to Shopify to power their online stores.
I expect this trend to continue in the years ahead, boosting Shopify’s revenues and profits significantly. It’s worth noting that this year, analysts expect revenue and earnings growth of 21% and 23%, respectively.
In the short term, economic weakness is a risk. In an economic downturn, small and medium-sized businesses can be vulnerable.
Another risk is the stock’s lofty valuation (the P/E ratio using the 2024 earnings forecast is about 70 right now). If revenue or earnings were to come in below analysts’ estimates (Q1 earnings will be posted this week), I’d expect the stock to take a hit.
Taking a long-term view though, I reckon this stock has the potential to be a big winner.
