Shopify – still a recommended buy?

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Hi!

I am a new member and interested in following the Gen X aggressive portfolio, however the current price of Shopify stock is steep (est. $600 per share). Is it still a recommended buy? It was great to see substantial growth since the original purchase, but I guess you can say I am wary…lol Let me know your thoughts!

Thanks,

David

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Asked on April 1, 2020 3:15 pm
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Private answer

Hi David,

Shopify has been one of our favourite stocks for some time. It was also one of our original Bull List stocks.

The resilience of Shopify's business model has been front and center in the current bear market. It has held up better than the average as merchants are no doubt flocking to open online stores (if they don't have one already).

Shopify's growth prospects have always been significant and as the market leader, is well positioned to grab a large chunk of their target market.

At today's prices, it isn't cheap but its actually not that expensive either. The company is expected to grow earnings at a 50% clip over the next few years. Not many companies can lay claim to that type of growth. It is for this reason it trades at a premium.

That being said, Shopify is known for making big price swings on either side. For this reason, we recommend averaging into a position regardless of market sentiment. It is even more important in the current bear market.

Just remember, Shopify was deemed 'expensive' at $100, $200, $300 etc.

Mat

Disclosure: I am long Shopify.

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Posted by Mathieu Litalien
Answered on April 2, 2020 6:45 am