Growth stocks have been massively out of favour over the last 12 months. In 2022, value stocks (as measured by the Dow Jones Industrial Average) outperformed tech stocks (the NASDAQ) by nearly two-to-one. Both value and growth stocks declined in price on average, but growth stocks fared far worse. As a result, many growth stocks are now cheaper than they were a year ago, and cheaper relative to value stocks. There may be a buying opportunity here. Growth stocks as a whole are still expensive, but some are getting close to a buyable level. In this article, I will explore three growth stocks that you can buy now with less than $100.
Shopify Inc (TSX:SHOP) is a Canadian tech company whose stock tumbled 75% in 2022. It rallied a little this year, but is still a long way off the all-time high. Today, Shopify stock costs $66, so you can easily start building a position in it with only $100 in the bank.
Should you actually do so?
There are many different opinions on this. Shopify bulls point to the fact that the company is still growing relatively quickly, and is raising its prices. Bears, on the other hand, point to the company’s still-steep valuation as evidence that it should be avoided. Personally, I’m a long-term agnostic on the stock. If you do buy it, make sure that it’s in the context of a well-diversified portfolio, not as a “big bet.”
Lightspeed Commerce (TSX:LSPD) is another TSX growth stock like Shopify that got beaten down badly last year. It started taking a beating a little earlier than SHOP did. In September of 2021, the short seller Spruce Point Capital released a scathing short report about LSPD that all but accused it of accounting fraud. Specifically, Spruce Point accused Lightspeed of aggressive revenue recognition (claiming they had revenue that hadn’t yet been collected and wasn’t certain to be collected). The report had an effect, as LSPD’s stock crashed immediately after it came out.
Is Lightspeed a buy now?
In this case, I’m leaning toward thinking ‘no.’ Lightspeed is still growing its revenue rapidly, but its costs are growing faster than its sales are, so losses are rising. On the bright side, it is a relatively cheap stock, trading at 0.85 times book value. I’d personally pass, but some investors might differ.
Pinduoduo (NASDAQ:PDD) is one growth stock I actually am very interested in. It’s a Chinese tech stock that is much cheaper than both Shopify and Lightspeed, and has excellent growth. Over the last three years, PDD has grown its revenue by 67% annualized, and its free cash flow by 41.5% annualized. Phenomenal growth. Yet, the stock only trades at 22 times cash flow, which is far cheaper than the two companies just mentioned. Pinduoduo is no bargain, but it’s a decent enough combination of growth and value. I own a small position in it, and I may add to it over time.