The Motley Fool

2 Retail Stocks Defying the Markets

Image source: Getty Images

Canadians across the country are preparing for another market downturn. Every penny counts in today’s market, and unfortunately the worst could be yet to come. Yet a surprising turn of events has caused retail stocks to become one of the few places investors can find some defensive stocks.

Not all retail stocks are created equal, however. In fact, during the last market crash most retail companies struggled to make ends meet. Brick and mortar stores closed around the world. This caused some companies to even close for good.

However, for those retail companies that saw an opportunity rather than a challenge, shares soared. Even today, with the stock market starting to dip as we head into fall, these stocks have continued to do well. In fact, once another crash hits, these stocks stand the best chance to dig out of that crash sooner than the rest of the markets.

So what stocks should you add to your watch list? Shopify Inc. (TSX:SHOP)(NYSE:SHOP) and Goodfood Market Corp. (TSX:FOOD).

Goodfood

Goodfood quickly found its feet during this pandemic. New clients across the country who couldn’t go to grocery stores went to Canada’s most popular meal kit service for help. The company became swamped by new customers. But once the growing pains were over, many saw the company rebound by leaps and bounds.

During the last few months, this retail stock has doubled in share price. Before the pandemic, shares were at about $3 per share. As of writing, those shares have more than doubled to about $6.50 as of writing, dropping down from an all-time high of $9.20 — tripling your money in just a few months.

As you’ll see above, revenue has also continued to climb, as the company signs on more customers. During the most recent quarter, revenue soared by 74% compared to the same time last year, up to $86.6 million.

Given that this retail stock is still in its infancy compared to other meal kits services, there is still a long way for this company to go within this billion-dollar industry.

Shopify

I’m not going to sit here and pretend Shopify doesn’t exist. There are a lot of articles out there touting the next Shopify, but Shopify is Shopify. And when another market crash happens, you’ll want to grab this retail stock again and again.

Shopify continues to exceed expectations through its performance. The company keeps making partnerships with huge companies such as Wal-Mart, bringing its bottom line up even higher. The exciting part is that the company is still in partnership mode, so investors have the fruits of these partnerships to look forward to.

It’s no secret that shares have soared this year, but it’s likely the company will continue to climb high for years to come. Already just this year shares are up 300% year to date! While I might expect this to slow down in the future, I wouldn’t say it’s going to crash any time soon.

Much of this is due to its continued revenue growth through recurring business, such as its subscriptions. While many are month-to-month subscriptions, its enterprise business Shopify Plus now have yearly subscriptions for larger clients. Second-quarter revenue soared by 97%, beating expectations yet again.

Bottom line

If you’re able to continue seeing these stocks rise during the pandemic, you could be in for serious cash. Let’s say you used your Tax-Free Savings Account (TFSA) room of $69,500 and put half toward each stock. If these stocks continue to grow by 300% each in the next year, it would turn your initial investment into an incredible $208,500!

Shopify isn't the only option out there to make you a billionaire.

This Tiny TSX Stock Could Be the Next Shopify

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!

Click here to discover how!

Fool contributor Amy Legate-Wolfe owns shares of Goodfood Market and Shopify. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of and recommends Shopify and Shopify. The Motley Fool recommends Goodfood Market.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.