Investing in Growth: Top Stocks to Consider in 2023

Table of Contents

1. Key Highlights:
2. Introduction
3. Shopify: The E-commerce Powerhouse
4. On Holding: The Premium Athletic Apparel Contender
5. The Broader Economic Context
6. Conclusion: A Look Ahead

Key Highlights:

• The S&P 500 and Nasdaq-100 have shown significant growth this year, with increases of nearly 8% and 10%, respectively.
• Shopify is emerging as a key player in e-commerce, recording substantial growth in gross merchandise volume (GMV) and expanding its service offerings.
• On Holding, a luxury athletic apparel company, is rapidly gaining market share, boasting impressive sales growth and high gross margins compared to established competitors.

Introduction

As economic indicators show signs of recovery, investors are reinvigorated and eager to seize the potential of the stock market. With moderating inflation rates and prospects of interest rate cuts on the horizon, the S&P 500 and Nasdaq-100 have displayed remarkable resilience, climbing nearly 8% and 10% year to date, respectively. This uptrend signifies a renewed confidence in the U.S. economy and offers a fertile ground for long-term investment opportunities.

For those looking to make informed decisions with a $1,000 investment, two standout companies have emerged: Shopify and On Holding. Both firms are not only riding the wave of current market trends but also positioning themselves for sustained growth in their respective industries. This article delves into the compelling narratives behind Shopify and On Holding, exploring their business models, market positions, and future potential.

Shopify: The E-commerce Powerhouse

An Overview of Shopify's Market Position

Shopify's ascent in the e-commerce realm is noteworthy. While Amazon dominates the sector with a market share of approximately 38%, Shopify's influence is often overlooked. This Canadian-based company does not sell products directly; instead, it empowers businesses to establish and manage their own online stores. When considering Shopify’s gross merchandise volume (GMV), which reached $75 billion in the first quarter of 2025—a 23% year-over-year increase—it becomes clear that it plays a pivotal role in the e-commerce landscape. This positions Shopify as a formidable competitor to Amazon, especially as e-commerce continues to grow as a percentage of total retail sales.

Expanding Services Beyond E-commerce

Shopify has evolved far beyond its initial offering of simple website solutions for small businesses. Today, it provides a comprehensive suite of services that cater to the demands of omnichannel shopping. This expansion includes order management, payment processing, marketing tools, and analytics services. The integration of Shopify with major platforms, including Amazon, enables merchants to manage their operations seamlessly from a single dashboard.

One of Shopify’s standout products, Shop Pay, has witnessed a remarkable 57% increase in GMV over the past year, underscoring its popularity among consumers. This versatility and the appeal to larger enterprises with significant budgets are driving Shopify's growth trajectory. The company's stock has also responded positively, showing a 20% increase this year, despite its high valuation metrics, including a forward P/E ratio of 71 and a price-to-sales ratio of 18. These figures reflect the market's optimism regarding Shopify's potential for long-term growth.

Risks and Considerations

Investors should remain cautious, however, as Shopify's premium valuation could set it up for a market correction. Timing the market can be challenging, but a long-term investment strategy could yield significant rewards as the company continues to innovate and expand its service offerings.

On Holding: The Premium Athletic Apparel Contender

The Rise of On Holding

Founded in 2010, On Holding has emerged as a disruptor in the athletic apparel industry. Initially gaining recognition for its innovative footwear, characterized by a unique cloud-like sole design, the company has expanded its product line and established a loyal customer base. With a market capitalization of $2.8 billion and a trailing twelve-month revenue that is growing at an impressive rate, On Holding is quickly becoming a serious competitor to established brands like Nike and Lululemon.

An Affluent Target Market

On Holding's strategy focuses on targeting affluent consumers, a demographic that demonstrates resilience even amid economic downturns. This approach has allowed the company to achieve remarkable sales growth, boasting a 40% year-over-year increase in sales during the first quarter, when measured on a currency-neutral basis. The company's gross margin, an indicator of profitability, has also improved slightly from 59.7% to 59.9%, setting it apart from its competitors.

Competitive Pricing and Market Potential

Though On Holding’s products are priced at a premium, this strategy translates into high gross margins, making it one of the most profitable companies in the athletic wear market. Its forward P/E ratio of 33 and price-to-sales ratio of 12 suggest that it is well-positioned for future growth, especially as it continues to carve out a niche in the luxury athletic apparel market.

Future Outlook

With a dedicated following and a commitment to innovation, On Holding is poised to outperform many of its rivals in the coming years. As the company expands its product offerings and taps into new markets, investors may find it a compelling addition to their portfolios.

The Broader Economic Context

Inflation and Interest Rates: A Balancing Act

The current economic environment is characterized by a delicate balance between inflation and interest rates. Recent reports indicate that inflation is moderating, creating a favorable climate for consumer spending and investment. The potential for interest rate cuts could further stimulate economic activity, benefiting sectors such as e-commerce and luxury goods.

Market Sentiment and Investor Confidence

Investor sentiment has shifted positively, reflecting an optimism that many analysts attribute to improving economic indicators. As companies like Shopify and On Holding demonstrate robust growth, there is a renewed confidence in the stock market, encouraging more individuals to explore investment opportunities.

The Future of E-commerce and Retail

E-commerce continues to gain traction as a fundamental component of retail. As more businesses seek to establish or enhance their online presence, companies like Shopify will likely see increased demand for their services. This trend is expected to continue, as consumer preferences shift towards convenience and digital shopping experiences.

Conclusion: A Look Ahead

Investing in growth-oriented stocks like Shopify and On Holding offers the potential for significant returns. Both companies are strategically positioned to capitalize on current market conditions and consumer trends. While Shopify continues to expand its e-commerce services, On Holding is redefining the luxury athletic apparel market.

For investors ready to navigate the stock market's complexities, these two companies represent compelling opportunities that could yield substantial rewards over the long term.

FAQ

What are Shopify and On Holding?

Shopify is an e-commerce platform that enables businesses to create online stores, while On Holding is a luxury athletic apparel company known for its innovative footwear.

Why should I consider investing in Shopify?

Shopify has shown impressive growth in gross merchandise volume and has expanded its service offerings, positioning itself as a leader in the e-commerce space.

What makes On Holding a competitive player in the athletic apparel market?

On Holding targets affluent consumers and has achieved significant sales growth with high gross margins, making it a strong contender against established brands.

Are there risks associated with investing in these stocks?

Yes, both companies have high valuations that could lead to market corrections. It is essential to consider long-term investment strategies and market conditions when investing.

What are the current market trends affecting these companies?

Moderating inflation and potential interest rate cuts are creating a favorable economic environment for growth in sectors like e-commerce and luxury goods, benefiting companies such as Shopify and On Holding.