Buy Amazon (AMZN), Shopify (SHOP) and Hims & Hers (HIMS) in May And Hold Forever

There’s a well-known saying in the investing world, which advises investors to “sell in May and go away.” Historically, that has been solid advice, based on the typical seasonality of markets and pure performance metrics at least over the span of recent decades.

However, there are some stocks that are starting to look more attractive than they have in some time, in part due to recent selloffs which have made their valuation multiples more attractive. Increased uncertainty thanks to various political maneuvers and a shifting geopolitical environment have lent the sort of volatility that benefits long-term investors who are willing to bite the bullet and buy the high-quality companies they’ve had on their watch lists at discounts when they arrive.

I’d argue the following three high-growth stocks have excellent upside potential given their current valuations relative to their future growth prospects. Here are the three companies I’ve got on my short list to accumulate on any future selloffs (and continue to build positions at current prices).

Amazon (AMZN)

Amazon (NASDAQ:AMZN) has been one of the rare consistent winners in the stock market for decades, benefiting from strong secular growth trends in the e-commerce and cloud sectors. An artificial intelligence beneficiary that’s been betting heavily on various product integrations for decades (before it was deemed “cool” by the markets), Amazon has found a way to become one of the most efficient and loved growth stocks in the market. 

Given the company’s status as a more mature growth stock, it should shock no one that this company trades at its lowest price-earnings multiple in the past five years. At just 32-times forward earnings, this is a stock that some investors who have been eschewing at 100-times earnings (plus) in past years now have an opportunity to pick up right near the market multiple. That’s a rarity for a company that continues to grow its earnings per share for its advertising and cloud business at more than 20% per year. 

If Amazon can see improved scale and innovation thanks to its AI investments, there’s a lot of upside to be had in owning this stock at current levels. Many top Wall Street analysts have models that suggest upside of more than 40% over the course of the next year, and I could certainly see such a scenario play out. 

Shopify (SHOP)

Another e-commerce player that has certainly seen its fair share of volatility since the onset of the pandemic is Shopify (NASDAQ:SHOP). The company’s share price still remains very depressed relative to its all-time high, and I think that could present a buying opportunity for investors who remain bullish on the underlying fundamentals of the secular growth catalysts which took this stock to its previous all-time high to begin with. 

The company’s strong growth has continued this past quarter, with the company seeing a 24% increase in its gross merchandize volume (GMV), the key metric many investors look at in terms of the company’s growth potential over time. That’s because Shopify earns the vast majority of its revenue from transaction fees for online shops set up using its platform. As the company’s client base continues to grow (and customers see more and more transactions take place online), Shopify stands to benefit.

With seven consecutive quarters of growth above 25%, I think Shopify’s forward multiple of 77-times earnings is reasonable. For investors with a holding period of at least two or three years, I’d expect the company’s forward multiple (say, 2027) to match that of Amazon’s today. With a superior growth rate and plenty of room to run, this would be the more aggressive growth pick that may be the most profitable for investors looking to put fresh capital to work today. 

Hims & Hers (HIMS)

Finally, I thought I’d dive into a company I haven’t really covered in the past, but one that’s come across my radar screen in recent quarters. Hims & Hers (NYSE:HIMS) is a transformative company in the healthcare space, looking to bring various services online that have typically been handled in clinic in the past. Through the company’s Telehealth platform, millions of consumers can have access to wellness products and other services which address mental health and primary care needs without having to leave the comfort of their own homes. Personally, I think this is one of those pandemic-driven winners that could have a much longer growth runway than many think (in a similar way to Shopify). 

HIMS stock has been volatile as well, but the company’s underlying fundamentals remain strong. Bolstered by a subscription model, the company’s profitability has improved (or rather, losses have narrowed). Over time, I think Hims & Hers could certainly become a profit machine, driven by a dedicated and loyal customer base that will keep coming back for more.

Now, plenty of companies have looked to become the online solution that disrupts the healthcare sector. And as many of us are well aware, the traditional healthcare model is one that’s sticky and probably isn’t going away tomorrow. 

But over the long-term, I think this company’s forward price-sales multiple which has ranged between 4 and 6-times makes sense. For those thinking very long-term, this is a more speculative pick I think is worth considering on any meaningful dips moving forward. 

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