When it comes to growth stocks, there remain few better options on the TSX right now that can measure up to Shopify. Since its IPO in 2015, this company has generated substantial returns for investors. However, there is no doubt that Shopify still has ample room to grow in the long term.
It appears that I’m not the only one singing praises of this growth gem. Indeed, the CEO of Ark Invest, Cathie Wood, seems to believe that Shopify could be the next Amazon. Here’s why.
E-commerce growth an unstoppable catalyst
Broadly speaking, e-commerce growth is expected to remain sky high over the long term.
However, some sectors will see larger grows rates than other. According to eMarketer, social media-driven e-commerce sales are one area of focus for investors right now. In the U.S., these sales are expected to grow by nearly 35% this year. That’s some pretty impressive growth.
Indeed, more and more consumers are turning to social media platforms like Twitter, Instagram, and Facebook for their purchases. And it appears that Shopify is in a great position to take advantage of this situation in the explosive e-commerce space. Unlike other online storefronts like Amazon, Shopify powers the backend storefronts of many SMBs setting up shop using social media.
Now, how the market share struggle goes from here between Amazon and Shopify-powered social media businesses remains to be seen. Some would argue the pie is large enough to have both players coexist.
However, Woods seems to think Shopify has got the upper hand in terms of long-term growth catalysts. She’s picking Shopify to outgrow Amazon. Indeed, that’s a pretty impressive endorsement.
My view is that Shopify’s platform provides investors with unique leverage to the rise of e-commerce everywhere. The company’s a broad-based play on this secular catalyst, and investors like Cathie Woods are buying in.
I don’t think it’s a mistake that Shopify has grown to become Canada’s largest company by market capitalization. Shopify stock isn’t cheap by any stretch of the imagination. Indeed, shares are priced to perfection — or pretty close to perfection.
However, the company’s growth offering today is unlike anything else investors will find on the TSX right now. For those who believe this growth trade has legs, this is a stock to consider right now. I remain bullish on Shopify as a long-term holding.
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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.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Fool contributor Chris MacDonald has no position in any of the stocks mentioned. David Gardner owns shares of Amazon and Facebook. Tom Gardner owns shares of Facebook, Shopify, and Twitter. The Motley Fool owns shares of and recommends Amazon, Facebook, Shopify, Shopify, and Twitter and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon.