Two Baillie Gifford stocks I’d buy today (which aren’t Tesla)

Baillie Gifford has made billions for its investors in recent years by investing in Tesla stock. Here, Edward Sheldon looks at two other BG stocks he’d buy today.

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In recent years, many Baillie Gifford funds have delivered enormous returns for investors. Take the Baillie Gifford American fund, for example. Over the last five years, it’s returned more than 400%. Clearly, the firm – which is a major shareholder in Tesla – has some top stock pickers.

Today, I’m going to highlight two growth stocks that are currently held across Baillie Gifford funds. I think these stocks have considerable long-term growth potential and I’d be happy to buy both for my own portfolio today.

A Baillie Gifford ‘gig economy’ stock

One stock I’m very bullish on from a long-term investment point of view is Upwork (NASDAQ: UPWK). It operates the largest freelance employment platform in the world. Baillie Gifford is a top five shareholder here, owning about 3.6% of the company.

There are a few reasons I like this stock. The first is that I believe Upwork offers a brilliant service. I’ve personally used its platform for many years (both as an employee and an employer) and found it to be fantastic.

The second is that the company is growing rapidly. Over the last five years, revenue has climbed from $164m to $374m.

The third is that the freelance market is forecast to get much bigger in the years ahead. In 2020, the ‘gig economy’ was worth around $300bn. However, by 2023, it’s expected to be worth over $450m. This should benefit Upwork.

Finally, Upwork should benefit from a stronger global economy. As economic conditions improve, businesses are likely to hire more freelancers.

There are risks to consider here, of course. One is the valuation. Currently, the stock sports a market-cap of $6bn. This means the forward-looking price-to-sales ratio is 13. That’s quite high. If future results are disappointing, the stock could fall. Another risk is competition from rivals such as Fiverr. It could steal market share.

However, I’m comfortable with these risks. Overall, I see a lot of investment appeal here.

An online shopping powerhouse

Another Baillie Gifford stock I think has a lot of long-term growth potential is Shopify (NYSE: SHOP). It operates an e-commerce platform that makes it extremely easy to launch an online store. Currently, it has over 1m merchants on its platform. Baillie Gifford is the second-largest shareholder here, owning about 5.1% of the stock. It’s currently the largest holding in its American fund. 

The main reason I’m bullish on this stock is that the e-commerce market is expected to grow significantly over the next decade. Last year, global online retail sales amounted to around $4trn. However, by 2027, it’s expected to hit $10trn. This industry growth should provide huge tailwinds for Shopify. This year, Wall Street analysts expect the company to generate revenue growth of around 40%.

While I’m bullish here, this isn’t a stock I’d load up on. That’s because it currently sports a price-to-sales ratio of about 37. That valuation is very high, meaning there’s considerable valuation risk here. If growth slows, this stock could take a hit.

I’d be happy to buy a small position for my diversified portfolio though. As always, it’s about balancing risk versus reward.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Edward Sheldon owns shares in Upwork and Shopify. The Motley Fool UK owns shares of and has recommended Fiverr International, Shopify, and Tesla. The Motley Fool UK has recommended Upwork. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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