The Top 5 Most Popular Stocks in Stock Advisor
1. Shopify (NYSE: SHOP)
Shopify logo
Why we love this stock:
Shopify serves as an online retail operating system for more than 1 million businesses around the world. By offering simple, inexpensive, yet highly effective tools that help vendors start and scale their online stores, Shopify is helping to power the e-commerce revolution for entrepreneurs.
Shopify has grown at a torrid clip in recent years. Its gross merchandise volume — the total amount of sales its platform facilitated — rose from $7.8 billion in 2015 to $61.1 billion in 2019. During this time, Shopify's revenue soared from $205 million to more than $1.5 billion, making it one of the fastest software companies to cross $1 billion in annual sales.
Yet Shopify has long runways for growth still ahead. The global retail e-commerce market will surpass $6.5 trillion by 2023, up from $3.5 trillion in 2019, according to Statista. Shopify currently facilitates about 6% of online retail sales in the U.S. and a smaller percentage of international e-commerce sales, and it's rapidly gaining share in these enormous markets.
Shopify excels at finding new ways to serve its customers, and each new service it provides helps it grab a larger piece of the overall e-commerce pie. Its engineer founder-CEO, billionaire Tobi Lütke, leads a company steeped in a culture of innovation and delighting entrepreneurs and merchants.
Today, Shopify is now serving as a lifeline to countless small businesses that have seen their traditional retail stores decimated by COVID-19. By helping these businesses shift their stores online, Shopify is helping them survive and prosper.
Massive businesses are also beginning to realize the value Shopify provides. Recent partnerships with Facebook (NASDAQ: FB) and Walmart (NYSE: WMT) should help to fuel Shopify's already impressive growth. A $650-plus billion market cap in 10 years for Shopify isn't as crazy as you might think.
Add SHOP to your Favorites
2. The Trade Desk (NASDAQ: TTD)
The Trade Desk logo
Why we love this stock:
The Trade Desk has developed a cloud-based programmatic advertising platform that enables clients at advertising agencies and elsewhere to produce successful ad campaigns. The company has access to ad space on a wide variety of different media channels, including not just the internet but also social media, mobile apps, video content, audio music and podcasts, and connected television.
Businesses rely on advertising to drive sales, and they'll spend nearly $700 billion in 2020 on ads even in a coronavirus-weakened global economy. The Trade Desk has tapped into only about 1% of that market so far, but it's built a platform that's become the go-to resource for many of the world's largest ad agencies. One reason for that client loyalty is that The Trade Desk offers ads at cost, collecting revenue from subscriptions rather than arbitrarily tacking on markups to its pricing.
Growth has continued to impress, with a 33% year-over-year revenue gain in the first quarter of 2020 as adjusted net income soared 88%. Connected TV, mobile video, and audio have been the biggest drivers of rising ad spending for The Trade Desk recently, with a long runway to grow further.
Its award-winning software has given The Trade Desk a strong reputation that helps bring in new clients. After seeing brief declines due to business closures during the worst of the COVID-19 pandemic, ad spending numbers have bounced back sharply. The Trade Desk has established itself as the leader in an important niche, and a huge addressable market gives its stock room for even more explosive gains.
Add TTD to your Favorites
3. Amazon.com (NASDAQ: AMZN)
Amazon.com logo
Why we love this stock:
Amazon.com is ubiquitous. If you aren't one of the nearly 120 million U.S. Amazon Prime subscribers, you've almost certainly seen the company's branded boxes or delivery vans around your town. Best known as the world's largest e-commerce merchant, Amazon is also a cloud-computing powerhouse and the leader in the infrastructure-as-a-service (IaaS) market.
Amazon's competitive advantages are numerous. No other e-commerce business can match its scale, operational efficiency, fulfillment infrastructure, cost advantages, and customer service. Amazon continues to plow its significant cash flow ($24.3 billion in free cash flow in the trailing-12-month period ended in Q1 2020) back into the business, reinforcing the company's competitive advantages and strengthening its dominance.
In addition, Amazon has seen a surge in demand in its e-commerce business since the pandemic hit, with millions of consumers staying home and ordering products like food and essential goods online. The COVID-19 crisis has also likely boosted Amazon's Prime subscription growth, as some users who were not Prime members yet took the opportunity to finally become members during the quarantine. An investment in Amazon now looks particularly timely.
Finally, while e-commerce is Amazon's best-known business, it also has wildly successful initiatives beyond online sales. From streaming video and music to web hosting to digital advertising and more, this powerhouse is a critical part of our increasingly digital economy.
Add AMZN to your Favorites
4. Zynga (NASDAQ: ZNGA)
Zynga logo
Why we love this stock:
Zynga is a video game developer that specializes in mobile gaming. The company is best known for social games like FarmVille and Words With Friends, which became popular just as the social media platform giant Facebook (NASDAQ: FB) was starting to reach its peak growth more than a decade ago. Following Zynga and Facebook's mutual decision to break off their relationship, it took some time for the social video game pioneer to get its momentum back.
Lately, though, Zynga has made big strides in rediscovering growth and capturing opportunities in the video game space. With the mobile side of the video gaming business being the most exciting and potentially lucrative space in the industry, Zynga's strategic moves have put it back in position to become a leader within this highly competitive sector. Moreover, the stock hasn't yet fully reflected Zynga's potential, making now a good time to take a closer look at it.
The secret of success for most video game companies is to come out with popular franchises that can produce big hits on a recurring basis. Zynga has done a good job of extending the life of its best early games while also finding new blockbusters.
In addition to regular social games, Zynga has sought growth in its gambling niche. The introduction of theme-based social slot machine games has also enhanced the success of its poker site. The Game of Thrones Slots Casino game has taken off recently, and other offerings like Wizard of Oz Slots and Hit It Rich! Slots have also helped boost the overall portfolio's performance.
With so much promise in the mobile gaming niche, Zynga has its attention focused on the right part of the video game market. We think investors should forget about some of Zynga's growing pains a decade ago and instead focus on its current opportunity to keep sales and net income climbing in the years to come.
Add ZNGA to your Favorites
5. Zoom Video Communications (NASDAQ: ZM)
Zoom logo
Why we love this stock:
Zoom Video Communications is a leading cloud-native platform that provides videoconferencing, as well as audio, web conferencing, and instant messaging. During the COVID-19 pandemic, the company has become a household name and a verb: "Let's Zoom."
We believe Zoom could grow much more over the coming decade. Arguably the most important driver of the company's success is CEO Eric Yuan's passion and his focus on customer and employee happiness. His commitment to employee happiness is evidenced by his stellar 98% approval rating on Glassdoor.
The massive influx of inexperienced users, as many around the globe switched to working from home during lockdowns, resulted in hackers gaining access to unsecured classrooms and meetings, causing disruptions. Yuan took full responsibility, apologizing and publishing a 90-day plan to secure the platform.
Many users with access to competing solutions have flocked to Zoom because of its ease of use, which is nothing short of impressive. For many, it has become the default solution for remote meetings. This helped push revenue up 169% year over year while also generating a profit and strong cash flow in the first quarter.
https://www.fool.com/premium/stock-advisor/cove...
