Many Foolish readers are familiar with the investing adage, “sell in May and go away.” This strategy is based on the theory that the November to April period has historically boasted the strongest returns. Today, I want to look at how a June 2019 investment in two TSX tech stocks has flown in the face of this rule. This article is not aimed at criticizing this old investment adage but rather in admiring the performance of these tech darlings. Let’s dive in.
The ultimate tech stock: Shopify
Shopify (TSX:SHOP)(NYSE:SHOP) is an Ottawa-based e-commerce company that debuted on the TSX back in May 2015. The company has developed into a household name, largely due to the stunning rise of its stock price. In late April, I’d explained why Shopify was on the path to a quadruple-digit valuation.
Its first-quarter 2020 results saw Shopify post total revenue of $470 million — up 47% from the prior year. Gross merchandise volume (GMV) increased 46% year over year to $17.4 billion. However, its net loss climbed to $31.4 million, or $0.27 per share, over a net loss of $24.2 million, or $0.22 per share, in the prior year.
Shares of Shopify closed at $367.95 on June 4, 2019. Shopify stock was worth $1,029.33 as of close on June 3, 2020. This represents a 180% surge from the prior year. An investor with $5,000 this time last year could have purchased 13 shares of Shopify. That investment would be worth $13,381.29 at the time of this writing. This is an amazing return for this top tech stock. Shopify is a pricey pick up today, but it still boasts enticing long-term growth potential.
An unsung tech hero: Kinaxis
Kinaxis (TSX:KXS) is another Ottawa-based technology company. It specializes in supply chain and operations planning software. Back in the summer of 2019, I’d explained why Kinaxis was one of the most underrated IPOs of the 2010s. Kinaxis has been a high performer since its 2014 TSX debut, but it has really kicked it into high gear in 2020.
The company released its first-quarter 2020 results on May 6. It posted total revenue growth of 15% to $52.8 million and an adjusted EBITDA margin of 29%. Gross profit climbed 10% year over year to $36.9 million and cash from operating activities increased 12% to $20.9 million. Kinaxis has reiterated its forecast for SaaS growth between 23% and 25% for the full year.
Shares of Kinaxis closed at $76.63 on June 4, 2019. The stock closed at $174.37 on June 3, 2020. This represents a 127% increase from the prior year. An investor with $5,000 last year would have been able to purchase 65 shares of Kinaxis stock. That investment would be worth $11,334.05 at the time of this writing.
These monster tech stocks have rewarded shareholders very nicely over the past year. A $10,000 investment split between Shopify and Kinaxis would be worth over $24,000 right now. Moreover, the growth story is far from over for these companies. Shopify and Kinaxis both boast immaculate balance sheets and a dominant foothold in their respective sub-sectors.
One little-known Canadian IPO has doubled in value in a matter of months, and renowned Canadian stock picker Iain Butler sees a potential millionaire-maker in waiting...
Because he thinks this fast-growing company looks a lot like Shopify, a stock Iain officially recommended 3 years ago - before it skyrocketed by 1,211%!
Iain and his team just published a detailed report on this tiny TSX stock. Find out how you can access the NEXT Shopify today!
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 Ambrose O'Callaghan has no position in any of the stocks mentioned. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of and recommends Shopify and Shopify. The Motley Fool recommends KINAXIS INC.