Stock market sell-offs are an unfortunate but unavoidable part of being an investor. In the last two decades, the S&P 500 has fallen by 10% or more on 10 different occasions. But every past correction in the U.S. market has ended in a new bull market, and there is no reason to believe this one will be any different. That means the current situation is actually a buying opportunity for patient investors.
There are a few ways to capitalize on that. Putting money into an S&P 500 index fund would be the easiest and least risky, because it provides you with instant diversification. But if you prefer to pick individual stocks, Global-e Online (GLBE 0.78%) and Axon Enterprise (AXON -0.74%) look like smart buys right now.
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Global-e Online
Global-e is on a mission to make commerce border-agnostic. Its platform integrates with a business's digital storefront to improve the experience for international buyers. That means localizing the language, currency, and payment methods on a market-by-market basis, which helps boost international conversion rates and drive cross-border sales. Global-e also works with over 20 shipping carriers to provide fulfillment services for its merchants, and it handles the calculation and remittance of import duties and foreign taxes.
In providing those services, Global-e captures a tremendous amount of market-specific consumer data, creating a flywheel effect that should drive long-term growth. Specifically, every new piece of information makes its artificial intelligence models a little better at optimizing conversion rates. That should bring more merchants to the platform over time.
Thanks to that value proposition, this young e-commerce company is growing quickly. Revenue soared 65% to $76.3 million in the first quarter, driven by a particularly strong performance in the United States. On a less optimistic note, Global-e is unprofitable on a GAAP basis, and it generated negative free cash flow of $11.6 million in the first quarter. However, the company has $188 million in cash and equivalents on its balance sheet and no long-term debt, meaning it can afford to invest aggressively in growth.
On that note, Global-e sits in front of a massive market opportunity. Cross-border e-commerce spending will total $736 billion in 2023, according to Forrester Research, fueled by the uptick in online shopping and direct-to-consumer sales. For context, Global-e facilitated $1.6 billion in sales over the past year, meaning it has captured roughly 0.2% of its addressable market.
Currently, Global-e stock trades at 11.7 times sales, which is near its cheapest valuation as a public company. That's why now looks like a good time to buy.
Axon Enterprise
Axon is best known for its conducted energy devices (CEDs), which are sold under the brand name TASER. The company has long ranked as the market leader in CEDs, and TASER sales rose 16% in the first quarter. But revenues from the company's newer software and sensors businesses soared 48%, and those products account for most of its $52 billion addressable market.
Axon's ecosystem of sensors consists primarily of body-mounted cameras and in-car camera systems, both of which feed video and location data to its cloud-based software. That includes tools for digital evidence management, incident reporting, and real-time situational awareness. Those products improve efficiency, safety, and transparency for clients like law enforcement agencies, fire departments, and emergency medical personnel, as well as commercial enterprises.
Financially, Axon was firing on all cylinders in the first quarter. Revenue climbed 32% to $256 million, and the company posted a GAAP profit of $0.76 per diluted share, up from a loss of $0.75 per diluted share in the prior-year period. Better yet, the company is well-positioned to maintain that momentum.
Axon has customer relationships with 17,000 of the 18,000 law enforcement agencies in the U.S. That edge has helped it extend its leadership in CEDs into body cameras and digital evidence management software. Building on that foundation, the company recently added justice system software to its portfolio. Its new product, Attorney Premier, allows public defenders and prosecutors to manage digital evidence and share it with police.
Axon's expansion into justice system software is particularly savvy because it creates a flywheel effect with its law enforcement-facing products. As more clients on one side adopt Axon's digital evidence management software, it becomes incrementally more valuable for all clients on the other side. More broadly, Axon's capacity for innovation should keep it growing quickly for years to come. And with shares trading at 7.4 times sales -- well below their three-year average of 10.6 times sales -- now looks like a good time to buy this growth stock.
