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3 Top Canadian Stocks to Buy for the Santa Claus Rally

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Did you know that the stock market has historically risen in the last five trading days of December through the first two trading days in January? This calendar effect is called a Santa Claus Rally. There are several theories for its existence, including the increase in holiday shopping, optimism fueled by the holiday spirit, or institutional investors settling their accounts before going on vacation. Here are two stocks that could soar in a Santa Claus Rally.


Shopify (TSX:SHOP)(NYSE:SHOP) is a multinational e-commerce company based in Ontario. The all-in-one commerce platform powers over one million businesses worldwide. It enables people to gain independence by making it easier to start, manage, and grow a business.

Shopify has ranked number one in the 2020 TSX30 list of top-performing stocks, with an amazing return of 1,043% over three years. The TSX30 is a ranking of the best-performing TSX-listed stocks over the past three years. The company’s shares are up more than 180% since the start of the year. Shopify is well positioned to benefit from a Santa Claus Rally, as e-commerce demand has increased during the pandemic.

The online retail trend is here to stay. Sure, big pharmaceutical companies are ramping up testing for COVID-19 vaccines faster than at any other time, but it will be at least a few more months before anyone announces a breakthrough and customers return to the stores. By then, Shopify will absorb all of this e-commerce demand.

Shopify is now the most valuable company in Canada, with a valuation of $183 billion. Recently, the company announced its third-quarter financial results in October. Impressively, Shopify saw total revenue of $767.4 million, a 96% year-over-year increase. Shopify also posted a staggering gross merchandise volume (GMV) of $30.9 billion, an impressive 109% increase from a year earlier. Obviously, Shopify has benefited from the pandemic’s tailwinds.

Earlier this month, the company reported that Black Friday and Cyber Monday weekend generated sales of 5.1 billion. This record figure is a 76% increase from the Black Friday/Cyber Monday weekend last year. Shopify president Harley Finklestein puts it best: “The accelerated shift to digital commerce sparked by COVID-19 continues, as more consumers shop online and entrepreneurs mobilize to meet demand.”


Kinaxis (TSX:KXS) offers cloud-based supply chain management software to companies in the defence, automotive, consumer products, electronics, pharmaceuticals industry, and beyond.

The business is doing very well. Kinaxis reported year-over-year revenue growth of 17% in its latest quarter.

After several years in which it provided consistent and strong returns, Kinaxis stock exploded in 2019 and continued this outperformance in 2020.

In 2019, the company’s share price has jumped 42%. So far in 2020, the stock price has risen by about 70%.

In September, Kinaxis was named to the TSX30. The company ranked 26th with a total return of 140%.

RapidResponse, a cloud-based subscription software for supply chain operations, is Kinaxis’s gem. It is therefore not surprising that the demand for reliable supply chain management software is at an all-time high.

Globalized businesses face complex challenges, especially as COVID-19 mitigation efforts have a huge impact on the supply chain.

Economic and border closures are wreaking havoc, and platforms like RapidResponse are key to minimizing supply chain disruptions.

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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 Stephanie Bedard-Chateauneuf has no position in any of the stocks mentioned. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of and recommends Shopify. The Motley Fool recommends KINAXIS INC.

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