THE S&P 500 has risen 6% so far in January, and investors have high hopes that 2023 will be a better year than 2022. Nasdaq, which lost 33% of its value in 2022 compared to the S&P 500's 19% decline, is up 11% so far. A bull market is typically characterized by a 20% rise from its lows, and the Nasdaq appears to be on the right track.
Some investors may view the new bull market a little differently than the last time, having experienced a bear market. When considering how to invest in the future, consider large companies that have at least a path to profitability and cash generation, rather than exciting growth stocks whose financials seem too risky.
Of course, there are also the Nasdaq powerhouses that have already proven success as disruptors and long-term viability. Amazon (AMZN 2.57%), Free Market (APPLE TREE 1.71%) and Global-e Online (GLBE 6.39%) are three Nasdaq winners that could rise this year.
1. Amazon: much more than e-commerce
Amazon had a tough year, but don't let one year be the sole determinant of your investment decisions. Investors need to know that growth is rarely linear, and even the best companies go through tough times. You don't have to look far back to find better times. Amazon demonstrated extraordinary growth in 2020 and 2021, and many of last year's problems were due to the sharp slowdown in demand over the previous two years.
AMZN Revenue Data (Quarterly) from Y Charts
Furthermore, the dramatic increase in sales at the beginning of the pandemic highlights the essential role Amazon plays in global and US e-commerce. Amazon continues to add Prime members, now numbering over 200 million, and these loyal customers provide significant revenue that Amazon can use to improve its services and develop new businesses.
We also noted that sales increased again throughout 2022 and Amazon cut costs to align its infrastructure with current demand.
Management expects sales to grow 51% in the fourth quarter of 2022 and operating profit to range from $10 billion to $14 billion. Amazon reports fourth-quarter earnings on Thursday, and you can expect a big jump in the stock if it beats guidance. Either way, Amazon is well-positioned to continue gaining in the long term, and with its shares down nearly 30% in the past year, now is the perfect time to jump in.
2. MercadoLibre: Revolutionizing Latin American Commerce
MercadoLibre is similar to Amazon, but serves the Latin American market. And while Amazon, like most retailers and tech companies, is experiencing a slowdown, I don't think you'd exactly call MercadoLibre's double-digit growth a "slowdown," even though its sales growth is below the triple digits it was at the beginning of the pandemic. Revenue jumped 611,000 yen (311,000 yen) in the third quarter of 2022, a significant feat considering the macroeconomic environment, and net income jumped from 1,000,000 yen (95,000 yen) last year to 1,000,000 yen (129,000 yen) this year.
Like Amazon, MercadoLibre's core business is e-commerce. Furthermore, like Amazon, it has expanded into new businesses. In particular, it launched a fintech business that is enabling digital payments and offering a range of services to users.
While the entire company still demonstrates massive growth and incredible potential, the fintech business presents exciting opportunities. Off-platform payments, which include payments to businesses not on MercadoLibre's e-commerce sites, grew 122% year-over-year in the third quarter. The lending business is also booming, and this side of the business has enormous room for growth.
MercadoLibre shares have already risen 44% in January after falling in 2022, and investors should expect significantly higher gains.
3. Global-e: Every company needs its own services
Global-e is a global leader in international remittance and payment solutions. It maintains an easy-to-deploy platform that integrates with a company's digital retail systems and has numerous case studies demonstrating how its services help increase sales for clients.
It's easy to see why this is a simple addition to almost any e-commerce business, and Global-e's client list spans a range of high-end retailers, from luxury goods companies like LVM extension for the athletic company Adidas and king of entertainment Disney. But he also works with smaller companies, has a long-standing partnership with Shopifyand integrates with all Shopify websites.
The company has experienced exceptional growth since going public in May 2021, continuing with a 79% increase in year-over-year sales in the third quarter of 2022.
Global-e shares are up 38% in January after losing 67% of their value in 2022, and this is another stock with huge growth potential to buy before it soars.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, serves on The Motley Fool's board of directors. Jennifer Saibil holds positions at Global-e Online, MercadoLibre, and Walt Disney. The Motley Fool has locations 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 $ 1.45 calls on Walt Disney, short January 2023 $ 1.160 calls on Shopify, and short January 2024 $ 1.55 calls on Walt Disney. The Motley Fool has a disclosure policy.
