The S&P 500 is up 6% so far in January, and investors have high hopes that 2023 will be a better year than 2022. The tech-heavy Nasdaq, which lost 33% of its value in 2022 as compared with the S&P 500’s 19% drop, is up 11% so far. A bull market is usually marked by a 20% increase from lows, and the Nasdaq looks like it’s on its way.
Some investors may look at a new bull market a little differently than last time, having experienced a bear market. When considering how to invest going forward, keep in mind great companies that at least have a path toward profitability and cash generation in place of exciting growth stocks whose financials look too risky.
Of course, there are also the Nasdaq powerhouses that have already demonstrated success as disruptors as well as long-term viability. Amazon (AMZN 2.57%), MercadoLibre (MELI 1.71%), and Global-e Online (GLBE 6.39%) are three Nasdaq winners that could soar this year.
1. Amazon: Much more than e-commerce
Amazon has had a rocky year, but don’t let one year be the sole determinant of your investing decisions. Investors need to know that growth is almost never linear, and even the best companies go through tough periods. You don’t need to look too far back to find better times. Amazon demonstrated extraordinary growth in 2020 and 2021, and much of the trouble last year was due to slowdowns from the highly accelerated demand of the previous two years.
Even more, the dramatic sales increase at the beginning of the pandemic highlights the essential role Amazon plays in U.S. and global e-commerce. Amazon continues to add Prime members, which now top 200 million, and these loyal customers provide enormous cash for Amazon to put to good use in improving its services and developing new businesses.
Let’s also note that sales were still increasing throughout 2022, and Amazon has been cutting costs to bring its infrastructure back in line with current demand.
Management is guiding for a 5% sales increase in the 2022 fourth quarter and $0 to $4 billion in operating income. Amazon reports on fourth-quarter earnings on Thursday, and you can expect a big stock jump if it exceeds guidance. In any case, Amazon is well positioned to keep winning long-term, and with its stock down nearly 30% over the past year, now is as good a time as any to get started.
2. MercadoLibre: Revolutionizing Latin American commerce
MercadoLibre is similar to Amazon but services the Latin American market. And while Amazon, like most retailers and tech companies, is seeing a slowdown, I don’t think you could call MercadoLibre’s double-digit growth a “slowdown” exactly, even if sales growth is less than the triple-digits it was at the beginning of the pandemic. Revenue increased 61% in the 2022 third quarter, quite the feat considering the macroeconomic environment, and net income shot up from $95 million last year to $129 million this year.
Like Amazon, MercadoLibre’s core business is e-commerce. Also, like Amazon, it has branched out to new businesses. In particular, it launched a fintech business that’s powering digital payments and offers a slew of services for users.
While the entire company is still demonstrating massive growth and incredible potential, the fintech business has exciting opportunities. Off-platform payments, which comprise payments for businesses that are not on the MercadoLibre e-commerce sites, grew 122% year over year in the third quarter. The credit business is also expanding, and this side of the business has enormous room to grow.
MercadoLibre stock is already up 44% in January after declining in 2022, and investors should expect many more gains.
3. Global-e: Every business needs its services
Global-e is a global leader in cross-border shipping and payment solutions. It operates an easy-to-install platform that integrates into a company’s digital retail systems, and it has numerous case studies demonstrating how its services help increase sales for clients.
It’s simple to see why this is a no-brainer addition to almost any e-commerce business, and Global-e’s client list runs the gamut of high-profile retailers, from luxury goods companies like LVMH to athletic company Adidas and entertainment king Disney. But it also works with smaller companies, has a long-standing partnership with Shopify, and integrates into all Shopify sites.
The company posted outstanding growth since going public in May 2021, continuing with a 79% sales increase over last year in the 2022 third quarter.
Global-e stock is up 38% in January after losing 67% of its value in 2022, and this is another stock with enormous growth potential to buy before it skyrockets.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jennifer Saibil has positions in Global-e Online, MercadoLibre, and Walt Disney. The Motley Fool has positions in and recommends Amazon.com, Global-e Online, MercadoLibre, Shopify, and Walt Disney. The Motley Fool recommends the following options: long January 2023 $1,140 calls on Shopify, long January 2024 $145 calls on Walt Disney, short January 2023 $1,160 calls on Shopify, and short January 2024 $155 calls on Walt Disney. The Motley Fool has a disclosure policy.