Christmas is around the corner, and everyone is gift shopping online, as they stay in the safety of their homes amid the pandemic. Are you searching the internet for the best gifts under $100? This year, give a unique gift to your younger generation above 18 years of age. I bring to you two unique gifts that will stay with your loved ones for a long time.
The Canada Revenue Agency (CRA) offers a Tax-Free Savings Account (TFSA) to any Canadian above 18 years. Open a TFSA for your loved ones and buy both Lightspeed POS (TSX:LSPD)(NYSE:LSPD) and RioCan REIT (TSX:REI.UN) stocks for a total of $105. This $105 Christmas gift has the potential to become $4,000 in five years.
Give your kids the gift of investing early
Investing early in life goes a long way. Many people struggle to start investing, especially in the stock market. And if they lose money in their first stock, they get disappointed and call it quits. Instead of another sweater, you can get your loved ones the gift of early investing.
Imagine if someone gave you two stocks of Shopify on the Christmas of 2015 instead of a sweater that you never wore. Today, that $70 gift will be worth over $3,300. That’s a 4,600% growth in five years. All it takes is one stock, and that stock is Lightspeed in the current market.
The Lightspeed gift
Lightspeed POS stock has had the best year in the pandemic. In less than two years after going public, the company has made its mark in the point-of-sale (POS) market, growing organically and through acquisitions. Last year, its revenue surged 55%, and this year its revenue is expected to surge by 86%. This year, the company saw many retailers and restaurants discontinue their Lightspeed subscriptions in March and April when the pandemic struck. But Lightspeed was quick to adapt to the changing economy.
Before the pandemic, Lightspeed’s omnichannel platform helped retailers and restaurants integrate inventory, payments, purchases, and marketing of various stores on a single platform. It also provided data analytics for efficient working. Its model was more focused on store chains. In April, almost 80% of the physical store traffic moved online and drove its e-commerce solutions up 400%.
In the post-pandemic economy, Lightspeed adapted to the new normal of social distancing. It offered services like curbside pick-up, contactless payments, online booking, and online order management. The renewed Lightspeed platform helped retailers operate stores in the COVID-19 economy. Hence, its stock saw a V-shaped recovery.
After falling 67.5% in the March sell-off, the stock has surged a whopping 625% since then. A lot has happened between March and December. Lightspeed launched a U.S. IPO and acquired U.S.-based POS platforms Upserve and ShopKeep. These acquisitions and pandemic-induced organic growth is accelerating its revenue.
The RioCan gift
Walking on the line of retail stores and restaurants is RioCan REIT. The REIT owns stores in prime locations and is relatively less volatile than Lightspeed. An important rule of investing is never to put all your eggs in one basket. Diversification helps mitigate risk.
While Lightspeed stock surged over 600% during the pandemic, RioCan failed to recover completely from the March sell-off when its stock fell 46%. RioCan earns money from the rent tenants pay. As Lightspeed helped retailers reopen their stores in the pandemic economy, RioCan stock surged 35% from its March low. But the stock is still 38% below the pre-pandemic level.
However, RioCan is giving an 8.5% dividend yield during the pandemic. As the stock recovers to pre-pandemic levels, it will represent a 60% upside.
Investor takeaway
If you’d invested $100 in Lightspeed at its March bottom, you would have $725 in your TFSA in less than a year. The stock is currently trading at 64.5 times its sales per share, as it is riding the Santa Claus rally. It has the potential to grow significantly and become the next Shopify in the coming five years. But it is a risky stock. That is where RioCan comes and offsets any risk of decline. It has the potential to grow from $100 to $160 while paying an 8% dividend.
