It’s safe to say we aren’t in a bull market right now. However, if the stock market has taught us anything, it’s that economic conditions, good or bad, are never forever. This means that it’s only a matter of time before the next bull market is upon us. Looking back at history, we can also see that tech stocks have done extremely well during bull markets. This is because bull markets tend to be periods of great excitement and positivity, and tech stocks tend to capture a lot of that during the best of times.
In this article, I’ll discuss one stock that investors should consider buying today. I’m confident that during the next bull market, you’ll be very happy you bought this beforehand.
Which stock should investors buy before the next bull market?
In my opinion, investors should consider buying shares of Shopify (TSX:SHOP) before the next bull market. This is because consumer spending tends to increase during strong economic conditions. As a leader in the global e-commerce industry, Shopify could see a massive boost to its business during those times. If that’s the case, then we could be seeing massive growth similar to what happened when Shopify’s business was booming during the COVID-19 pandemic.
Although it’ll be very hard to reproduce a similar growth rate as its run in 2020 and 2021, there’s no denying that Shopify’s best days are still to come. The company has done an excellent job of acquiring new customers and expanding its services for existing ones. In addition, the company’s business remains strong with a 26% year-over-year growth in revenue being reported during its most recent earnings presentation. Unfortunately, the current economic conditions have hindered some of the growth that the stock could’ve experienced lately.
What risks are present in Shopify stock?
Obviously, no great investment comes without risks. Investors should keep this in mind when choosing to put money into any stock. In Shopify’s case, there are two big risks that investors should consider. First, if the economic conditions worsen, then Shopify’s business could suffer. For the most part, Shopify’s business doesn’t focus on the essentials. By that, I mean groceries and consumer staples. If the economic conditions take a turn for the worse, consumers may have to limit discretionary spending, lowering traffic on Shopify’s stores.
Second, there’s the risk that comes from its competitors. Although Shopify’s leadership positioning is formidable, there’s always the possibility that a company like Amazon could come in and squeeze Shopify out of its market share. Currently, I’m not very worried about this scenario, however, it’s certainly something to keep an eye on.
Foolish takeaway
If you can stomach some volatility before the next bull market comes around, then you could put yourself in position to reap the rewards once the economy is running at full speed again. I think Shopify is a great stock to buy in anticipation of the next bull market. Its position within the growing e-commerce industry could help this stock gain a lot of traction when tech stocks start flying again.
