Why is this great growth stock a smart choice now?

Since the beginning of 2023Nasdaq Resonanceindices (used form a nominal expression) The value has soared to 55%. Investor optimism is soaring, sending the tech-heavy benchmark index to a new all-time high.

But not all companies have benefited from the strong uptrend. Investors looking for solid deals in the market can still find them. In fact For long-term investors(math.) genusThere's a gorgeous one. (used form a nominal expression)Growth Stocks It is a wise choice.

Playing Long Term Games

Invest properly where you use a five or ten year time horizon. ConsideringThis framework. Etsy (NASDAQ: ETSY)It deserves a closer look.

The first thing to recognize is that this online marketplace for unique handmade goods has been experiencing a significant slowdown in growth. Gross Merchandise Sales (GMS), a number that tracks the total value of transactions on the platform, totaled $13.2 billion in 2023. This figure is essentially unchanged from 2021.

After the surge in demand during the pandemic, things have definitely cooled down. People have returned to their normal behavior and are shopping more in person at stores. Continuing Inflationary pressure Also for Etsy, which sells a lot of discretionary products.Bringing disadvantages.

These sleepy conditions help explain why the stock has plummeted. As of this writing, the stock is trading 77% below its peak price.

However, for those who can look ahead to the next few years, there is hope. I see three main reasons to be bullish on this business.

One factor that has potential investors excited is how Etsy has managed to compete in the brutally competitive E-commerce DomainOccupy a mat (used form a nominal expression) The company's team boasted that buyers of 83% said they could not find the goods on the website anywhere else. The company's management team boasts that 83% buyers say the site has items they can't find anywhere else. It's a shocking statistic that shows the real differentiation Etsy brings to the industry. This helps the company stand out.

Another reason to consider buying stock is Etsy's strong NetworkingThis is the economic moat that supports the company.(used form a nominal expression)One. Important features. At the end of 2023, the company had 96 million buyers and 9 million sellers in the global market. These figures are up from a year ago and significantly higher than pre-pandemic levels.

As the number of platform users increases, so does the value of the platform to existing users. This is because sellers have more potential customers and buyers have more places to shop.

Etsy's consistent profitability is the final reason it's a smart buyer. It's a model-based, capital-light business model that has been proven to generate positive returns on a regular basis. Over the past five years, Etsy has averaged an operating margin of nearly 17%.

Potential for Stable Returns

Now is the time to add this stock to your portfolio because the expectations are too low. The forward price-earnings ratio for the stock is only 14.4, and in today's frenzied market environment, it's hard to find a deal as attractive as this one, especially for a quality company like this one.

I believe Etsy will eventually return to solid GMS and revenue growth, which will lead to profit growth. This will boost the stock price.

The continued rise of online shopping is a strong tailwind in Etsy's favor in both developed and emerging economies. Additionally, interest in entrepreneurship is growing, which will help attract more sellers over time. From the customer's perspective, supporting small businesses is getting more and more attention these days.

Looking ahead to the next five years, I think Etsy has the potential to be a successful investment.

Should you invest $1,000 in Etsy right now?

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Neil Patel and his clients do not own any of the shares mentioned above.The Motley Fool holds a recommendation for Etsy.The Motley Fool has a disclosure policy.

Why is this growth stock a smart buy now?