Two Relentless Shares that Could Triple Your Wealth within Half a Decade
2024 saw the market indexes soaring, but there's still a plethora of excellent companies offering attractive valuations. With earnings multiples for top growth stocks showing signs of becoming excessively frothy, 2025 might be the ideal time to incorporate more value stocks into your portfolio. Here are two notable e-commerce companies that could potentially double your investment within the next five years.
1. Alibaba
Alibaba (BABA 0.54%) has experienced a downturn in recent years but presents a bargain price now. Analysts forecast this foremost e-commerce and cloud computing provider in China to maintain an earnings growth rate of 15% annually over the long term. Yet, the stock trades at less than 10 times 2025 earnings estimates.
The anticipated earnings growth alone would be sufficient to double the share price within five years; however, the stock's potential for investors to increase the share price due to an increased earnings multiple provides room for even better returns.
Factors contributing to Alibaba's undervalued status include:
- Economic Factors: China's economy has been experiencing some instability, and Alibaba has faced competition from PDD Holdings. But the company's recent growth in monthly users suggests that its reach in the market might be underestimated.
- Competitive Advantages: Alibaba's infrastructure, including cloud revenue acceleration due to growing demand for AI, puts it in a strong position in the market.
Alibaba's adjusted net income decreased by 9% year-over-year, but management has been focusing on improving efficiency and downsizing non-core assets. Additionally, the company has been returning dividends and engaging in share repurchases, which indicates strong value in its shares.
2. MercadoLibre
The Latin American e-commerce market offers significant growth potential for investors. This is where MercadoLibre (MELI -0.03%) comes into the picture, with its array of services ranging from mobile payments and shipping to credit and an online marketplace.
Analysts predict MercadoLibre's earnings growth to reach 30% per year based on the current consensus, justifying a stock price multiplier of 39 times expected earnings.
MercadoLibre has grown revenue at impressive rates, expanded its services, and continuously improved margins, which is expected to continue. The company's recent focus on enhancing logistics capabilities and fintech developments have contributed to its strong performance.
As a result, investors have a good chance of doubling their investment with MercadoLibre shares over the next five years.
- In light of the projected earnings growth rate of 15% annually for Alibaba, it might be a smart investment decision for individuals interested in finance to consider allocating funds into this undervalued company, given its low trading price of less than 10 times 2025 earnings estimates.
- With analysts anticipating a staggering 30% annual earnings growth for MercadoLibre, investors who are engaged in the practice of investing should consider adding this Latin American e-commerce giant to their portfolio, as its stock price multiplier of 39 times expected earnings may lead to significant returns and potentially double their investment within the next five years.