The Ultimate Growth Stock to Buy With $1,000 Right Now

Key Points

• The vast size of its e-commerce platform has become a liability for Amazon.

• Consumers increasingly want authentic, value-driven connections with brands.

• Shopify is emerging as the leading provider of a brand-first alternative to Amazon.

• 10 stocks we like better than Shopify ›

Are you having a tough time finding growth stocks you feel comfortable enough to buy in this crazy environment? If so, you're not alone. Many of the market's once-favorite names have fallen out of favor. It's not exactly clear where the economy is going either.

In uncertain times like these, the best move isn't necessarily narrowing your search to only the newest and most innovative names. The smartest move, rather, is finding the market's best-established growth companies with well-proven business models. And if you have an extra $1,000, you're ready to commit to this kind of investment.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

One of the best of this bunch right now is e-commerce platform Shopify (NASDAQ: SHOP). Here's why.

What (and why) is Shopify?

On the off-chance you're reading this and aren't familiar with it, it's simple enough. Shopify helps companies establish and manage their own online stores. From websites to digital shopping carts to payment processing to marketing (and more), this platform is a one-stop shop. Millions of e-commerce websites used Shopify's tech to collectively sell $292 billion worth of goods and services last year, up 24% from 2023's tally. In fact, you may have made an online purchase through its platform without even realizing it.

To fully appreciate what makes Shopify so compelling now, however, you must go back to a time before it even existed -- all the way back to 1994, when e-commerce giant Amazon (NASDAQ: AMZN) was first launched.

In its infancy, no one really thought anything of Amazon's ambitions to become an "everything" store. The company was new, and the internet itself was young -- the language was just puffery. Nobody considered what might happen if Amazon actually achieved its goal of becoming the dominant name in North America's e-commerce arena. But that's what happened.

Image source: Getty Images.

There's a downside to becoming the go-to name in selling online, though. That is, you attract your selling partners' competitors as well, ultimately pitting them against one another. In Amazon's case, it became the site's single-biggest seller, competing with the very third-party sellers it was serving. This model blurs the fine line between friend and foe. Amazon's sellers have said as much. But what's the choice when Amazon alone (according to data from Digital Commerce 360) accounts for 40% of North America's e-commerce market?

It's a question that finally got a viable answer back in 2006 when Tobias Lütke founded Shopify, allowing brands to easily open their own online stores outside of Amazon's ecosystem. The rest, as they say, is history. Although sellers and merchants must pay for access to Shopify's technology, they still have absolute control of the online sales process. They also appreciate that the company's tech enables them to directly build their own relationships with customers, as opposed to building relationships that mostly benefit Amazon.

Plenty of growth ahead

And the premise clearly works. The company's gross merchandise sales volume has gone from less than $4 billion in 2014 to last year's aforementioned $292 billion, pumping up its own annual revenue from roughly $100 million then to nearly $9 billion now and pushing the company out of the red and into the black in the process. And analysts expect this double-digit growth pace to persist for at least a few more years.

Data source: StockAnalysis.com. Chart by author.

This company could continue growing like this well into the distant future, too.

The key isn't how much retail business is now being done online and how much isn't yet. The U.S. Census Bureau reports that only about 16% of the nation's retail spending is e-commerce; the rest is still taking shape within brick-and-mortar stores and restaurants. Certainly, some of this business will never move online (like ice cream shops).

But a big chunk of that other 84% is up for grabs by enterprising outfits willing and able to figure out how to connect with consumers online. To this end, outlooks from Mordor Intelligence and Straits Research agree that North America's e-commerce industry is set to grow at an average annualized pace of just under 10% for the next several years, far outpacing overall retail sales' likely overall growth during this stretch.

The same basic dynamic applies overseas, too, by the way, where Shopify is increasingly finding a foothold. Straits believes the global online-shopping market is poised to grow by an average rate of right at 10% through 2033.

The thing is, Shopify may well win more than its fair share of this growth. See, consumers aren't just seeking out the convenience that online shopping offers. They're also looking for something that -- due to its sheer size -- Amazon just can't offer. That's authenticity.

A 2023 poll conducted by ESW puts things in perspective, indicating that 59% of worldwide consumers specifically look for brands that are true to their given core values, while 70% of the world's shoppers say they'll shop only with brands and retailers that appear authentic.

Amazon's crowded selling platform doesn't allow for this nuance. Users of Shopify's online-selling technology, conversely, have complete flexibility to tell their brand's story.

There's far more to like than not to like

Shopify stock isn't cheap, for the record. Priced at more than 80 times this year's expected per-share earnings of $1.39 and more than 60 times next year's projected bottom line of $1.80, this ticker's rich valuation leaves it vulnerable to sizable stumbles. So does the fact that it's priced slightly above analysts' consensus target of $113.49.

This is a story stock with a bright long-term future, though. It's been bouncing back from stumbles pretty well to continue adding to a gain that's now been underway since late 2022. The fact that it's not reclaimed levels last seen before the February-April sell-off is something of a gift to interested investors, although it's a gift that's quickly vanishing.

This might help inspire would-be buyers: Despite its steep price right now, over half of the analyst crowd covering this stock currently rates it as a strong buy. Bottom line? Shopify is a great company in the right place at the right time, making it a great growth stock for long-term investors to buy here with an otherwise idle $1,000.

Should you invest $1,000 in Shopify right now?

Before you buy stock in Shopify, consider this:

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Shopify. The Motley Fool has a disclosure policy.