These companies are aiming for substantial profits in their respective fields.
Growth stocks are often seen as a straightforward way for investors to build wealth in the stock market. If you focus on companies that are innovating and shaking up large sectors, you may just find the stocks that could deliver impressive gains.
Here are two growth stocks that have already brought significant returns to investors, and they also show promise for the long term.
1. Shopify
Shopify is a remarkable stock. Investors who purchased it shortly after its public debut in 2015 have seen their investments soar by over 4,000%, with an increase of more than 400% since the market dipped in 2022.
This growth highlights the value Shopify provides to business owners. For a relatively modest subscription fee, merchants gain access to AI tools that help set up online stores, process payments, and automate various tasks.
Shopify has ample room for further growth. The total transactions conducted through Shopify Merchants reached $88 billion last quarter, leading to an annual execution rate of $352 billion. Despite Shopify’s impressive double-digit growth, annual Gross Merchandise Volume (GMV) is just a fraction of the $6 trillion global e-commerce landscape.
Two critical points make Shopify a strong investment:
- Shopify utilizes AI to drive product development and increase revenue without raising costs. Remarkably, the company has reduced its workforce by over 850% in the last three years.
- Merchants using Shopify are outpacing the broader e-commerce market, indicating a solid competitive edge. The bulk of Shopify’s revenue comes from payments and other solutions for merchants, meaning as merchants thrive, so does Shopify. This competitive advantage provides a compelling case for those looking to succeed in a crowded e-commerce space.
Investors who buy into Shopify now can expect rewarding returns. There are plenty of global opportunities ahead, and the potential AI-driven enhancements in Shopify’s offerings could lead to significant returns that aren’t fully captured in the stock’s price just yet.
2. Duolingo
Duolingo has seen its stock rise by 235% over the last three years, despite a recent dip from its all-time high. This performance reflects a steady increase in daily active users (DAUs) and solid financial results in the language-learning sector. The company aims to disrupt education, a market that Morgan Stanley anticipates will reach $8 trillion by 2030.
Duolingo is gaining traction by attracting new users. DAUs climbed 40% year-over-year to nearly 48 million in the second quarter. While there are various ways to learn, Duolingo has succeeded in creating a fun, engaging platform that’s beginning to establish a recognizable brand.
Initially focused on language learning, Duolingo has expanded into areas like chess and mathematics, which could further increase its revenue potential, primarily through subscriptions like Super Duolingo and Duolingo Max, along with advertising and in-app purchases.
The company’s ability to disrupt education lies in its use of AI to tailor the learning experience for each user. The data gathered from users helps Duolingo continuously refine the app, keeping learners engaged.
As AI technologies advance, Duolingo can generate new content faster and at lower costs. Like Shopify, this could enhance its profitability. In the last three years, Duolingo’s 12-month revenue has surged by 161% to $885 million, with free cash flow skyrocketing to $321 million.
Undoubtedly, Duolingo’s growth stems from its commitment to helping people learn. The data shows that active users are increasing more quickly than monthly users, indicating that many people rely on the app daily. Clearly, Duolingo has the potential to carve out a competitive niche and possibly transform a multi-billion dollar industry.
