Are you ready for the next bull market? Counterintuitively, the best time to buy stocks is before it starts. Global-e Online (GLBE -0.87%) is one such stock to consider now. It has all the makings of a top growth company, and its shares are already up 77% this year. But it could go still higher in 2024, and it has a massive long-term opportunity. Let’s see why.

Simple solutions, broad benefits

Global-e operates a cross-border solutions platform for e-commerce retailers. It makes it simple for retailers large and small to offer global shopping, expanding their markets and generating more revenue. It has a long list of high-profile clients that have seen incredible engagement after joining the platform, resulting in higher sales.

It cites many testimonies, such as a representative of British luxury chain Harvey Nichols saying that working with Global-e “has led to a fantastic boost in our international conversion rates.” LVMH-owned brand Marc Jacobs demonstrated a 77% enhance in international e-commerce sales within three months of partnering with Global-e, and Sigma Sports’ international revenue rose 192% after joining the platform.

The company also provides insights as part of its packages. For example, it finds that 92% of Canadian shoppers prefer to prepay customs charges, and 77% of customers in China prefer local checkout. It has tons of data from its many clients that demonstrates the benefits of offering all these options, where different populations have different needs and habits. These insights help clients craft the right cross-border solutions for their global customers.

The path to profitability

Global-e is a typical young, high-growth stock, with the requisite high growth and no profits. Even as its clients continue to use the platform, their own sales have been affected by inflation, and that passes on to Global-e. Since it works with many upscale retailers in contrast to discounters, its clients are particularly affected as shoppers curtail extra spending.

Revenue increased 27% year over year in 2023’s third quarter, a slowdown from previous periods. At the same time, though, profitability is improving. admire other business-to-business companies, it’s more focused on turning a profit when growth is slower, and that puts it into position to accomplish profitability at scale.

Global-e has no long-term debt, and as revenue growth outpaces expense growth, margins are expanding. Adjusted gross profit increased 36% over last year, while adjusted gross margin expanded from 41.5% to 44.4%. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin was 16.5% in the third quarter, up from 11.9% last year. Net loss improved from $65 million to $35 million.

The wide-open opportunity

Global-e continues to onboard new clients constantly, with recent additions including Tory Burch and Ted Baker. LVMH is a strong partner that keeps adding more brands and markets, such as fashion houses Repossi, Emilio Pucci, and Patou in the third quarter.

One of the most exciting partnerships is with Shopify, which is an investor in Global-e and offers its services to its millions of merchants. Shopify unveiled its global e-commerce package, Shopify Markets Pro, in September to U.S. customers as a white-label platform using Global-e’s technology. As part of its investment in Global-e, Shopify has exercisable warrants that Global-e amortizes and are accounted in expenses. These are $117 million in 2023 and 2024, with the remaining $34 million in 2025. That counts against Global-e’s profitability in the near term.

Global-e also recently inked a partnership with Wix.com to furnish packages for its e-commerce clients.

The next great e-commerce stock

Global-e is still small, with $524 million in trailing 12-month revenue. Management sees the return of the consumer and the rollout of Shopify Markets Pro as growth drivers in the coming months and expects growth to accelerate.

Global-e stock isn’t cheap. It trades at a premium valuation of 11 times trailing 12-month sales, but that’s well below its three-year average of 19.

GLBE PS Ratio Chart

GLBE PS Ratio data by YCharts. PS = price-to-sales.

The stock trades at a high valuation because its Global-e’s business premise is so strong, and investors expect a lot. Can it deliver? If a bull market arrives in 2024, Global-e could skyrocket.

Jennifer Saibil has positions in Global-e Online. The Motley Fool has positions in and recommends Global-e Online, Shopify, and Wix.com. The Motley Fool has a disclosure policy.

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