While the fears surrounding a 2023 recession aren’t unfounded, it’s far from guaranteed. But even if the worst comes to pass, there is a refuge in knowing that the stock market has a perfect track record of recovery. And as all investors know, buying high-quality businesses at dirt-cheap valuations is a recipe for enormous long-term wealth generation.

With that in mind, I believe these two e-commerce businesses could be some of the best shares to buy now before the eventual rally.

Is Shopify one of the best shares to buy now?

Shopify (NYSE:SHOP) reached a pretty lofty valuation last year. And even after collapsing by nearly 80% over the previous 12 months, the business still trades at a premium.

As a quick reminder, the group operates an online platform that enables individuals and businesses to establish an online storefront. However, over the years, its product offerings have expanded. And it now includes a sales analytics platform, payment processing solutions, as well as issuing small business loans. Moreover, the company recently completed an acquisition to provide customers access to an enormous logistics network.

Today, most of the revenue stream comes from processing payments for websites built on its platform. And therefore the drop in consumer spending obviously poses a serious threat to the top-line income.

Pairing this with the stiff competition from companies like Amazon only adds more pressure. But with just under $7bn in cash on its balance sheet, I believe this business has more than enough liquidity to survive a potential recession.

The share price will undoubtedly be volatile over the next year. But once things eventually begin to normalise, I have a hunch the company can resume its impressive growth trajectory seen since I initially invested in 2017. That’s why I believe it may be one of the best shares to buy now for my portfolio.

Another fallen-from-grace e-commerce stock

Much like Shopify, ETSY (NASDAQ:ETSY) hasn’t had a great run lately. In fact, the growth stock is down around 44% over the past year.

The e-commerce company operates an online platform that enables individuals to sell products. But what differentiates it from other similar platforms like eBay is the community. Items found on ETSY are almost exclusively unique hand-crafted artisan products. As such, it’s rare to find the same stuff on other platforms or in brick and mortar stores.

The group generates revenue by charging fees for listing and selling products. And since it’s largely home to discretionary items, the drop in consumer spending means demand is currently being impacted. In fact, the slowing growth is one of the main reasons why the stock dropped so sharply this year.

Operating in a recession is obviously going to be challenging for ETSY. But with over $1bn of cash at its disposal, I believe the business can equally survive the economic turmoil. And with its niche firmly secured within the e-commerce space, these could be the best shares to buy more of in my portfolio today. At least that’s what I think.

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As a result, some exciting opportunities have emerged, including the two firms outlined below. Considering their growth potential and current valuations, I reckon these are some of the best shares to buy right now. 

Market niche 

One of the most exciting companies to emerge over the past couple of years has been the Trade Desk (NASDAQ: TTD). This organisation helps online advertisers manage their content and advertising campaigns.

While it is facing stiff competition from the likes of Amazon and Google, the business has carved out a niche in the market. This has enabled the corporation to grow earnings at a compound annual rate of around 80% since 2015.

However, I think it is unlikely this sort of growth rate is sustainable. Nevertheless, as the global online advertising market continues to expand, I also think the business has tremendous potential over the next few years.

Shares in the company have fallen around 30% since the end of 2021. I can see why some investors might reduce their exposure to the business as competition in the online advertising market increases. Privacy issues could also be a concern for the group. 

Nevertheless, I would buy the stock for my portfolio following this decline as a long-term growth play. The online advertising market is strong and it is only going to expand in the years ahead. This is why I think the company is one of the best shares to buy right now. 

Shares to buy for economic growth

It has never been easier to start a small business. Entrepreneurs have a range of tools available to help them sell products and services online. The companies that help facilitate these transactions could be some of the best shares to buy right now as the economic recovery gains traction. 

Etsy (NASDAQ: ETSY) is one of the leading players in the space. Since 2015, its sales have risen 10-fold as consumers have flocked to its online marketplace, which still has vast potential.

Despite revenues of $2.3bn, the firm is still tiny in comparison to the likes of Amazon, which is over 100 times bigger. 

That said, I cannot take the company’s growth for granted. It is facing increasing competition, and some users are moving away from the platform due to its high commission costs. These headwinds could hold back growth. 

Still, with the stock having fallen 55% from its 2021 high, I think the shares are beginning to offer growth at a reasonable price. Indeed, the stock is currently selling at a 2022 forward price-to-earnings (P/E) multiple of just 38. That is below the firm’s five-year average of around 75. 

With further growth on the horizon, I believe this multiple undervalues the company and its potential. 

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But has this actually created fantastic buying opportunities for my portfolio? Let’s explore two potential ‘monster’ investments for the long term.

A future king in e-commerce?

The rising popularity of online shopping today is hardly a secret at this stage. And that’s why Etsy (NASDAQ:ETSY) has caught my attention. Instead of competing directly with other e-commerce giants like Amazon or Shopify, this business focuses on the market niches most tend to ignore. I’m talking about the artisans, crafts, and vintage-goods segments.

Looking at its share price in recent months, it may not seem like things are going well. After all, this growth stock is down almost 50% since late November. But when looking at the underlying business, some exciting progress emerges.

The group has recently made acquisitions that add exposure to the social commerce market. According to Grand View Research, this represents a potential $3.4trn industry by 2028. And given Etsy is currently only a $20bn company, the room for growth seems explosive.

The rising level of competition, and steady recovery from the pandemic, could potentially lead to a slowdown. In fact, fears of growth stagnating seem to have caused the stock to plummet recently. While there is some merit to this concern, I personally believe Etsy is in a strong position to overcome these challenges. Therefore, to me, the falling price looks like an excellent buying opportunity for my portfolio.

Growth stock behind the pharma industry

Veeva Systems (NYSE:VEEV) has seen a similar tumble to Etsy in recent months, bringing its 12-month performance to a disappointing -17% return. The company provides a cloud-based customer relationship management suite for the pharmaceutical and biotechnology industries. But the platform goes beyond the basics, with additional tools for clinical data analysis, regulatory compliance, and trial evaluations.

With demand for such services skyrocketing in the race for a Covid-19 vaccine, Veeva’s revenue jumped 33% between January 2020 and 2021. What’s more, looking at its half-year report, revenues have continued to grow by an impressive 29% versus analyst expectations of 25%. In my experience, a company that can consistently beat expectations is the hallmark of a potential monster growth stock.

The complexity of the drug development industry seems to have created organic barriers to entry against disruptive start-ups. This has proven to be quite valuable in staying on top. But it’s also a double-edged sword. With so many pharmaceutical companies relying on Veeva’s technology, clients could leave en masse if its compliance solutions fail to keep up with changing regulations. The same applies to its analytical toolkits. Retaining customers could become far more challenging if a competitor can provide better technology.

So far, Veeva Systems seems to be thriving, despite what the share price would indicate. As such, I believe now could be the perfect time to increase my position within this growth stock.

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Earnings versus investors

Despite what the falling Etsy share price might suggest, its second-quarter earnings report is actually quite encouraging. At least, I think so. Over the last six months, total revenue came in at just under $1.1bn. That’s around 64% higher than a year ago despite easing lockdown restrictions. This, in turn, pushed operating income to $239m, increasing proportionally to revenue growth.

Needless to say, that’s pretty good news. So why did the share price slide in aftermarket trading?

The falling Etsy share price

Going into this report, many investors were concerned about the fall in e-commerce sales in general. Last week shares of Amazon dropped like a stone following a disappointing earnings release. Now that bricks & mortar stores are reopening their doors, the level of online spending has naturally declined. And this is something that has already begun impacting Etsy’s revenue stream.

Revenue for the quarter did grow by double-digits. But the management team’s guidance for the next three months didn’t show signs of additional growth. The business has forecast revenue to be between $500m and $525m, compared to the $528.9m achieved this quarter. That goes against analyst expectations of $527m. But also, Etsy decided not to provide full-year guidance due to the ongoing impacts of Covid-19 around the world.

It seems there is a growing level of uncertainty amongst businesses and investors surrounding the demand for online shopping once the pandemic has ended. With that in mind, it’s easy for me to see why the Etsy share price took a hit. But are investors overreacting?

Taking a closer look

I have no doubt that online spending will see some decline over the next six months as the pandemic hopefully comes to a close. However, I think it’s important to remember that 2020 was an exceptional year. So, comparing results to a time when online sales were pretty much the only viable shopping solution for non-essential items (like the ones sold on Etsy’s platform) doesn’t seem sensible to me.

Instead, comparing this forecast against third-quarter earnings of pre-pandemic 2019 is far more telling. And it shows that revenue has increased by over 150%! So, while e-commerce popularity might be falling compared to a year ago, I believe it will remain firmly above pre-pandemic levels moving forward.

The risks of a slowdown remain prominent. After all, Etsy is hardly a cheap stock, meaning volatility will likely continue over the short term. But as an existing shareholder, this recent decline looks like a buying opportunity for my portfolio. And so, I am tempted to buy some more.

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