After a turbulent end to the 2018 year and the first half of 2019 swinging up and down like a yo-yo, this summer is a great time to re-evaluate your investments and see whether you might want to move some things around.
Not to say you need to buy and sell everything you have. Far from it. Long-term investments should always be what investors aim for, because those usually come with long-term gains. However, it’s a great idea to create a short list of stocks to watch for the rest of the year so that by 2020 you have a chunk of data to look back on when you perhaps have a Christmas bonus or some money stashed away to put towards some new investments.
One area I would recommend investors analyze carefully is the e-commerce industry. While a stock like Shopify is a great option to keep on a watch list — especially since there are so many predictions of a fall in share price — there are others that look incredibly promising for the long-term investor.
If I’m going with one e-commerce stock, it’s going to be Lightspeed POS (TSX:LSPD).
Lightspeed had the largest initial public offering (IPO) of a Canadian company so far this year, raising $240 million and marking the largest Canadian tech IPO in nine years. Even Shopify can’t make that claim. Since its IPO in March, the stock has steadily risen 108% as of writing.
Its post-IPO quarterly results gave the stock a significant boost. The point-of-sale software company reporting $77.5 million in revenue for 2019 — an increase of 36% from last year.
So, why invest in Lightspeed ahead of 2020? While the point-of-sale arena is a fairly saturated one, Lightspeed has set itself apart by using advanced analytics and supply chain management features for businesses. Right now, those businesses are only small and medium sized, with Lightspeed charging a subscription. However, as the company expands, it could no doubt add on much larger clients, especially since it is already being used in over 100 countries.
And while point of sale might be saturated, there is still lots of room to grow. Research suggests the market will be worth $108 billion by 2025, putting Lightspeed in a position to expand even further over at least the next six years.
Is it all hype?
As I mentioned, Lightspeed’s first post-IPO earnings report came in with a 36% increase in revenue year over year. So, while that number is impressive, the company needs to continue proving that it can keep coming up with profits.
That’s why investors were thrilled on Thursday to see revenue growth of 38% year over year in the company’s second quarterly earnings report. Software and payments revenue also grew by a whopping 40% year over year, which is part of the company’s recurring revenue. The news sent the stock up almost 10% in overnight trading to about $45.50 per share.
As for future growth in 2020, analysts believe over the next 12 months, this stock could rise to $50 per share. If earnings stay on this path, Lightspeed could be well on its way to becoming the next Shopify. That’s why today it’s my top choice to add to your watch list for what to buy in 2020.
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of Lightspeed POS Inc, Shopify, and Shopify. Shopify is a recommendation of Stock Advisor Canada.