Shopify (TSX:SHOP)(NYSE:SHOP) is one of the most popular Canadian growth stocks today. The company has showcased massive growth in the last few years as the demand for its easy-to-use e-commerce platform has skyrocketed lately.
That’s one of the reasons why its stock has consistently delivered outstanding returns to its investors in the last few years. But is this TSX growth stock still worth buying in September 2021? Before exploring that, let’s find out how much money you would have made if you’d bought SHOP stock exactly a year ago.
SHOP stock price today vs. a year ago
In the last year, Shopify’s share prices have outperformed the broader market by a wide margin. The stock has yielded a solid 53% positive return since September 4, 2020. During the same period, the S&P/TSX Composite Index has inched up by nearly 28%. Let me try and put it into simpler terms. If you’d invested $1,000 in SHOP stock a year ago, your invested money would have grown into $1,533 today.
That’s an amazing positive return to get on a stock investment within a year. But it’s not even close to what SHOP stock is known for. For example, if you’d invested $1,000 in Shopify stock at the beginning of 2019, your investment would have grown by 931% by now to more than $10,300.
Shopify’s massive growth
From the stock return comparison above, it’s clear that you must keep your money invested for the long term to get much higher returns on your investment. While Motley Fool investors have enjoyed SHOP stock’s outstanding returns in recent years, I don’t expect its long-term rally to end soon. Let me explain why.
Shopify has posted remarkable growth in the last few years. Its annual sales jumped to about US$2.9 billion in 2020 from just US$673 million in 2016. At a time when most new companies started facing devastating COVID-19-related headwinds last year, Shopify’s business flourished like never before. In 2020 alone, its revenue surged by 86% YoY (year over year) — supporting a massive growth trend in its adjusted earnings.
The growth story has just started
The pandemic accelerated the online buying and selling trends. This tough phase made many businesses explore new opportunities and understand the importance of e-commerce. That’s why many small- and medium-sized businesses are now planning to heavily invest in building their online presence in the post-pandemic world.
To benefit from this demand surge, Shopify plans to continue aggressively reinvesting its profits into its business. Its focus on international expansion along with the expansion of the Shopify fulfillment network clearly reflects its aggressive growth plans. These are some of the reasons why I expect Shopify to post much better-than-expected sales and earnings growth in the coming years and keep its stock soaring for the long term.
SHOP stock has already risen by 35% this year so far compared to a 19% rise in the TSX Composite benchmark. Nonetheless, the company’s immense future growth potential makes its shares worth buying even today for long-term 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.
The Motley Fool owns shares of and recommends Shopify. The Motley Fool recommends the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.