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A Top Growth Stock With a History of Market-Beating Returns

As we wrap up the first quarter of 2018, a disappointing trend is emerging for equity investors in Canada. The nation’s benchmark stock market is among the worst-performing markets globally.

So far this year, the S&P/TSX Composite index is down 3.6%, underperforming all other major indexes in North America. There are many reasons responsible for this poor performance, including uncertainty surrounding the North American Free Trade Agreement, the lack of energy pipeline capacity, and the shortage of domestic tech and healthcare stocks in the index.

Investors who want better returns for their dollars don’t have many options when they look around. Here is a top growth stock you might find worth looking at when other sectors aren’t performing.


Unlike the U.S., investors in Canada don’t have many options when it comes to investing in technology companies. This space is very limited with a few top names, and Shopify Inc. (TSX:SHOP)(NYSE:SHOP) is certainly one of them.

Since its IPO in 2015, this e-commerce platform provider has delivered gains of more than 450% when compared to 3.5% gains in the broader market.

Behind this explosive growth is the company’s success in providing a reliable and easy-to-operate e-commerce platform to small- and medium-sized businesses globally. In a matter of few years, Shopify has achieved the reliability and scale that many top technology companies envy. Shopify currently powers more than 500,000 businesses in 175 countries with some top global brands using its platform.

In the fourth quarter, Shopify showed investors that the demand for its services remains strong. Its revenue surged 71% to US$222.8 million, beating the Wall Street consensus of US$209.48 million. Shopify expects full-year revenue of as much as US$990 million. That forecast also beats the US$957.1 million estimate by analysts.

These strong sales helped Shopify to report a profit for the quarter, excluding some costs, of $0.15 a share — higher than the $0.05 analysts had predicted.

For future growth, Shopify plans to expand into new non-English-speaking markets, targeting some of the world’s largest economies, such as Japan, Singapore, France, and Germany.

The bottom line

Trading at $194.20 a share, Shopify stock is up 47% so far in 2018, riding successfully through the market volatility and a sale call by a famous short seller, Andrew Left of Citron Research, who last year severely criticized the company’s growth model and raised doubts about the sustainability of many of its small-business users. I don’t think Shopify stock has run out of steam as of yet. It still remains the top pick for those who are looking to make market-beating returns.

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Fool contributor Haris Anwar doesn't own shares of Shopify. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of Shopify and SHOPIFY INC. Shopify is a recommendation of Stock Advisor Canada.

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