Finding a good return on the market is easier said than done this year. With the TSX down 15% so far this year, many investors would be content with incurring just a minor loss at this point. The coronavirus pandemic is putting many businesses at risk and a recession appears inevitable at this point.
But that doesn’t mean that all investments are struggling. The two stocks listed below are having phenomenal years and are soaring well above the TSX. And it may not be too late to buy them as they could continue rising in value:
Shopify
Shopify Inc (TSX:SHOP)(NYSE:SHOP) has defied all odds and has found ways to continue to rise in value even after an incredible 2019 where its share price was up 184%. It has provided an encore this year as shares of Shopify have already doubled and it now has become the most valuable stock on the TSX.
By now, investors likely know Shopify’s overpriced when looking at just about any multiple. So instead, let’s focus on why it could continue to go higher despite its expensive price tag.
In the company’s first-quarter results, released on May 6, Shopify reported strong year-over-year sales growth of 47%. The Ottawa-based company’s seeing a surge in activity as more users flock to its platform as many stores have shut down or are not open as often as they were before the pandemic.
For consumers, Shopify can fill a void as malls are ghost towns and shopping’s not quite the experience it was before COVID-19. At the same time, people staying at home and who are out of work may be looking for ways to sell products and services online to help make up for lost wages.
With those two forces in place, it wouldn’t be impossible to see the company continue to generate strong growth numbers this year.
As expensive a stock as Shopify is today, if the company can maintain a growth rate of around 40% to 50%, it wouldn’t be surprising for its share price to keep climbing. While I wouldn’t bank on it doubling again, there’s definitely room for investors who buy today to still earn double-digit returns.
Barrick Gold
Barrick Gold (TSX:ABX)(NYSE:GOLD) isn’t having quite the year that Shopify is, but it’s no slouch, up around 60% year to date. Barrick also released its first-quarter results on May 6, and it too had a great performance.
Sales were up 30% from the prior-year quarter and the company’s bottom line increased by 374% as it benefited from impairment reversals that propped up its net income.
But it’s not a surprise that Barrick is doing well as gold prices have been soaring over the past year. It was only a year ago that the price of gold was around US$1,275/oz. Now, it’s up close to US$1,745/oz. That’s an increase of 37% in just one year’s time.
Investors have been buying up gold as the markets have become overpriced. And with the coronavirus pandemic threatening the stability of global economies, gold prices may continue to rise.
By benefiting from a higher price of gold, it Barrick in therefore in an excellent position to earn more revenue and see more of its sales flow through to the bottom line.
