1 Growth Stock Down 55% to Buy Right Now

If you're looking for a bargain-priced growth opportunity, look no further than Shopify (NYSE: SHOP). Although shares are up more than 200% from their late 2022 low, they're also still down 55% from their 2021 peak. More importantly, they're currently chugging higher for all the right reasons.

Here's everything you need to know, and why it could be a great addition to your portfolio.

Shopify offers online sellers what they increasingly want

If you're not familiar with it, Shopify helps businesses of all sizes establish an e-commerce presence. Although platforms like eBay (NASDAQ: EBAY) and Amazon (NASDAQ: AMZN) are a simpler means of connecting with customers online, these third-party platforms lack the flexibility and customization that merchants increasingly want. They can also be relatively expensive to use.

Then there's the more philosophical motivation to avoid using e-commerce middlemen like Amazon or eBay and instead do your own thing. That is, utilizing these online malls potentially introduces a seller's customers to its competitors. By giving merchants a means of directly selling to consumers, conversely, Shopify allows businesses to forge real relationships and drive repeat business.

And the numbers say online sellers increasingly love the option. Users of the company's online selling tools sold $67.2 billion worth of goods and services during the second quarter of the year, up 22% year over year, extending growth trends that are expected to persist for the foreseeable future. The company's own revenue reached $2 billion for the same quarter, growing just as much. This top line includes a combination of subscriptions, transaction-processing fees, and a little bit of advertising at its app store.

Perhaps most important, although the swing to a profit seen during and because of the COVID-19 pandemic has since been unwound, Shopify's making progress back toward the black. It turned an actual profit in Q2 of this year, in fact, reporting net income of $170 million.

SHOP Revenue (Quarterly) data by YCharts

Analysts expect these profit margins to widen moving forward, too.

Rising tide

The crux of the argument for buying Shopify stock while it's still discounted, however, isn't about the company itself -- it's already proven it's capable of delivering what merchants increasingly want. Rather, the bullish argument is rooted in the maturing e-commerce marketplace that's playing right into the hand Shopify is holding.

As of its most recent look, market research outfit PYMNTS reports eight out of every 10 small or medium-sized business in the United States leverage at least one online channel for promotional purposes, with about as many using purpose-built e-commerce tech.

On the surface, this seems like a potential problem for Shopify's continued growth. If most prospective clients are already online, they won't be signing up to use Shopify's services again.

Those numbers omit a crucial detail regarding online shopping's future, though. That is, while these businesses may already be managing an online presence, most of them also believe the bulk of their future revenue growth will come from their e-commerce operations...

...which it very likely will. For all the growth the world's e-commerce industry has already experienced, most shopping is still done offline, in person. The U.S. Census Bureau reports that only 16% of the United States' retail spending is currently done online (and let's assume a similar figure for outside of the U.S.). That leaves a massive amount of room for e-commerce to continue growing at brick-and-mortar's expense.

And it is growing. After growing 7.6% last year, FTI Consulting predicts the nation's e-commerce industry will expand another 9.8% this year. Yet, that growth still leaves online shopping at only a fraction of traditional retailing's size. Let's also again assume that comparable growth rates apply overseas.

Connect the dots. That's a huge growth wave for Shopify to ride.

If you like Shopify stock, don't tarry

So why then is this stock still down 55% from its 2021 high? In simplest terms, it's the unique circumstances of the time.

Shares of Shopify unsurprisingly soared during and because of the COVID-19 pandemic. Once the dust settled and retailing began returning to normal, however, the market recognized it had bid this ticker up too far, and too fast. Investors corrected the mistake in 2022, but arguably overcorrected it. There's a reason shares have been recovering ever since that low, in step with the company's continued growth. Yet there's plenty more upside potential left to tap.

The analyst community isn't exactly on board with this bullish assessment, for the record. While roughly half of this crowd considers this name a strong buy, just a little less than half only see Shopify stock as a hold. The consensus price target of $80.22 is also slightly below this ticker's present price.

Don't sweat their lackluster, ho-hum view too much, though. This caution is largely rooted in near-term valuation concerns that won't likely apply a few years from now, when Shopify's got far more scale than it does right now. That's the end result the stock's current buyers are likely keying in on here, and rightfully so.

Bottom line? Shopify is not necessarily right for everyone's portfolio. But it's certainly a compelling prospect for most growth-minded investors that can stomach a bit of volatility.

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

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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 recommends eBay. The Motley Fool has a disclosure policy.