Investors in technology are always searching for the newest and greatest thing. But a wise investment can be in businesses that have already achieved success and made a name for themselves in their fields.
Smart investors have the chance to purchase two top-notch equities to keep for 2022 and a very long time after that. Shopify (SHOP -7.22%) and Alphabet (GOOG -2.27%) are the two major players in online shopping and digital advertising, respectively. Strong secular tailwinds in these two sectors might support growth over the long run.
Alphabet’s yearly revenues are getting close to $100 billion.
The world’s most powerful advertising firm, in my opinion, is Alphabet. It is the home of two of the most popular ad-supported programs, YouTube and Google Search. Google Search has a staggering 83% market share among search engines worldwide, according to Statista. Similarly, YouTube claims to have 2.6 billion active viewers per month. Naturally, advertisers follow customers, thus the popularity of these services has attracted advertisers attempting to influence consumer choices.
Alphabet’s revenue increased as a consequence, rising from $55.5 billion in 2013 to $257.6 billion in 2021. Over the same period, operating income climbed from $15.4 billion to $78.7 billion. The popularity of Alphabet has resulted in immediate and potential future riches. The amount spent by marketers worldwide in 2021 increased by 22.5% to $763 billion. It’s interesting to note that from 52.1% in 2019 to 64.4% in 2021, digital channels accounted for a larger percentage of expenditure. Due to the advantages that digital advertising provides over conventional forms of advertising, this trend is unlikely to change.
Shopify’s earnings have soared.
Similar to that, Shopify operates in a sector that is expected to expand. The firm, which grew as a result of the epidemic, aids retailers in establishing and enhancing their online sales channel. Although customers are willing to leave the home and shop in person, at least temporarily, Shopify’s growth has lately stalled. Longer term, a larger percentage of expenditure is moving online. In 2020, 14% of purchases made in the United States will be made online, according Statista. By 2025, that percentage is expected to increase to 22%.
Shopify receives a monthly fee from platform users who are retailers as well as a cut of their sales. Shopify will thus grow as more individuals spend money online. The trend has already caused Shopify’s sales to soar in recent years. By 2021, revenue had increased from $24 million in 2012 to $4.6 billion. After reporting an operational loss of $2 million in 2012, this assisted the business in turning a $269 million profit in 2021.
Stocks of Shopify and Alphabet are reasonably priced.
Thankfully, the shares of Shopify and Alphabet are not pricey for astute investors. Instead, they represent relative savings. When using this criteria, Shopify has seldom ever been less expensive at a price-to-sales ratio of 10. The price-to-sales ratio of six for Alphabet is below the historical average. Shopify and Alphabet are wise additions for those searching for solid investments.
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