The UK stock market has many opportunities, yet sometimes the best growth stocks are located internationally. These past couple of months haven’t been kind to US growth stocks, with many seeing their prices tumble.
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.
Zaven Boyrazian owns Etsy, Shopify, and Veeva Systems. The Motley Fool UK has recommended Etsy, Shopify, and Veeva Systems. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
