2 Monster Growth Stocks to Buy Before Sales Jump 94% and 136%, According to Wall Street

Stocks are often valued based on earnings or cash flow, but both values ​​are ultimately limited by sales. For this reason, strong sales growth often goes hand in hand with stock price appreciation, and analysts anticipate strong sales growth from Shopify (STORE -0.56%) and Cloudflare (NET -0.47%) in the coming years.

• Shopify reported $7.7 billion in revenue over the past 12 months. Wall Street expects sales to rise 94% to $14.9 billion in 2027, implying annual growth of 21%.
• Cloudflare reported $1.48 billion in revenue over the past 12 months. Wall Street expects sales to grow 136% to $3.5 billion in 2027, implying annual growth of 28%.

Read on to learn more about these monster growth stocks.

1. Shopify

Shopify is the market leader in e-commerce software, and its enterprise platform Shopify Plus is the leading omnichannel commerce software. This success stems from its ability to simplify retail. Shopify offers a turnkey solution that enables merchants to build and manage their businesses across physical and digital storefronts. It also provides adjacent services for payments, marketing and logistics.

Shopify reported excellent financial results in the second quarter, beating expectations on the top and bottom lines. Revenue rose 20% to $2 billion due to particularly strong growth in subscription software sales, although sales of merchant services also grew at a steady pace. Meanwhile, non-GAAP net income rose 94% to $345 million.

Investors have good reason to believe Shopify can maintain its momentum. Management estimates the addressable market at $849 billion. The company is well positioned to capitalize on this opportunity, given that Shopify merchants account for 10% of online retail sales in the United States and 6% of online retail sales in Western Europe.

Additionally, investments in more sophisticated tools — custom storefront capabilities, wholesale features, machine learning-based marketplace software — targeting larger brands are paying off. For example, gross merchandise volume (GMV) from wholesale features grew 140% in Q2 as more merchants adopted Shopify Plus. This is noteworthy because the wholesale e-commerce market is growing faster than retail e-commerce.

As noted, Wall Street expects Shopify to grow sales by 21% annually through 2027. That estimate makes the current valuation of 12.6 times sales look fair, despite being a premium to the average of two years 11.4 times sales. Investors with a time horizon of at least three years should consider buying a small position in this growth stock today.

2. Cloudflare

Cloudflare offers a range of cloud services that accelerate and protect IT infrastructure while removing the cost and complexity of on-premises network hardware. Specifically, its portfolio includes application performance and security services, zero-trust network security services, and developer tools. Engineering expertise and scale have helped the company secure a strong presence in all three verticals.

To elaborate, Cloudflare operates the fastest cloud network on the planet and powers about 20% of the web. This gives the company deep insight into performance issues and security threats across the Internet, creating a network effect where each new data point improves its ability to route traffic quickly and securely.

Industry analysts have praised Cloudflare for its technology. For example, International Data Corp. recognized its leadership in content delivery network software and zero-trust network access and Forrester Research called the company a leader in leading-edge development platforms. These accolades tell potential customers that Cloudflare is worth considering.

The company reported solid financial results in Q2. The number of customers increased by 21% to exceed 210,000, and existing customers spent 12% more. In turn, revenue rose 30% to $401 million, and non-GAAP net income rose 106% to $69 million.

Investors have good reason to believe the momentum will continue. Cloudflare has barely dented its $176 billion addressable market, and investments in go-to-market capabilities are paying off. Management said sales productivity showed double-digit improvement during the quarter.

As mentioned, Wall Street expects the company’s sales to grow 28% annually through 2027. That makes the current valuation of 18.7 times sales look reasonable, especially when the two-year average is 19.5 times the sales. Investors with a time horizon of at least three years should consider buying a small position in Cloudflare stock today.