If you follow the trends in sentiment among retail investors, you may be quite amused. It is very interesting to see how quickly, and large, shifts in sentiment can occur. At the start of the market crash, retail investors were clamoring about dividend stocks since these companies were trading at very high yields.
As the market seemed to bottom out, investors shifted over to companies they thought would give the best returns in the event of a turnaround. Then, as the tech sector hit another gear during the recovery, retail investors seemed to jump onto whichever tech stock was performing the best over that week. Now, with COVID-19 cases spiking, investors have been getting excited over telehealth stocks in hopes of catching another large run up.
In this article, I will discuss two companies that seem to have been forgotten about by retail investors. Even though these two companies are not in the spotlight as much as they have been previously, I believe their businesses are as strong as ever.
Which two companies have Canadian retail investors lost interest in?
The first company that investors seem to have left behind is Shopify (TSX:SHOP)(NYSE:SHOP). Not only do retail investors not talk about this company as much these days, Canadians are not even searching about it on Google. One way to determine which companies are being talked about the most is to check out its popularity among searches.
During the market recovery from April to June, Shopify was always near, if not at, the top of the list in terms of popularity among Canadians. However, in the past few weeks, Shopify has been nowhere to be found. In contrast to this lack of attention, the company reported an outstanding quarter in Q3. Shopify reported nearly a 100% growth in quarterly revenue in Q3 2020, compared to the previous year. In addition, its revenue sources are more diversified than ever.
It is interesting that Shopify has not been receiving as much attention, regardless of this incredible performance. As of this writing, Shopify stock is down 0.66% since June 30. This stagnation could be the reason why investors are avoiding the stock.
Similarly, investors have not been very interested in Docebo (TSX:DCBO). This could be attributed to a mere 3.21% gain in its stock since August 6. However, this company remains as my second favourite company listed on the Canadian public markets. Docebo has been working on solidifying its positioning as a leader within its industry. I believe Docebo has done this, this past quarter, through its multi-year partnership with Amazon.
Docebo is a very interesting company in that it operates in an industry that will only see higher demand in the future. With integrations such as the one it has with Salesforce, Docebo should continue to be a leader for the foreseeable future.
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What should investors do?
I am a strong believer in investing in companies that others are not focused on. While companies are seeing incredible runs, investors should be wary about chasing stocks. The lack of attention in Shopify and Docebo may give investors an opportunity to build positions in these companies. Investing in companies that others are not focused on will also help you avoid the dangerous behaviour of following trends.
Shopify and Docebo have not been receiving much, if any, attention from Canadians in recent weeks. However, this does not align with how well both companies have been performing. Both Shopify and Docebo are leaders in their respective industries. They have also shown in this past quarter that they do not intend to concede those positions any time soon, which could well open up an opportunity for prudent investors.
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.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Fool contributor Jed Lloren owns shares of Docebo Inc. and Shopify. David Gardner owns shares of Alphabet (A shares), Alphabet (C shares), and Amazon. Tom Gardner owns shares of Alphabet (A shares), Alphabet (C shares), Salesforce.com, and Shopify. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Salesforce.com, Shopify, and Shopify and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon.