With the market rally running out of steam once again, and a recession likely up ahead, there’s a feeling of unease. Making things worse, the recent banking troubles south of the border have really made for a choppy environment.
Though the bank runs and failures may not yet be over with, I think things aren’t as bad as they seem. Looking ahead, the U.S. Federal Reserve may finally have a reason to pause or pivot. Of course, they’ll be data driven, as they always are. However, it’s worth noting that banking woes and relatively resilient corporate earnings could help keep markets holding steady.
Indeed, one should never rule out the possibility of a market correction. That said, don’t expect the next recession to accompany a sharp selloff that brings us back to the lows seen in October of 2022. Some recession-induced damage is already factored in here. We have been hit with a year-long bear market in the United States, after all.
In this piece, we’ll give one top tech stock a second look for beginner investors looking to get a good value for money after the past year of rate and recession fears.
Consider Shopify (TSX:SHOP): one of my favourite Canadian tech titans to hang onto for decades at a time.
A tech titan for the long haul: Shopify
It’s been a painful plunge for Shopify stock, with shares crashing more than 82% from peak to trough between 2021 and 2022. Shares have stabilized and have begun trending higher in recent quarters.
Still, the stock has plunged into a bear market on multiple occasions over the past year. When looking at the longer-term chart, these dips are less noticeable. However, investors must be prepared to dodge and weave past punches thrown by a fiercely volatile market.
Looking ahead, I expect SHOP stock will continue to be a choppier mover than the S&P 500 or TSX Index. Volatility isn’t always a bad thing, though. Remember, volatility means steep moves in both directions. As Shopify looks to stage its recovery from an epic crash, I think it can support its current rally with compelling innovations.
Shopify stock gets a vote of confidence
Recently, an analyst named Andrew Boone of JMP Securities stated that Shopify is an e-commerce leader that’s “gaining traction with larger enterprise businesses.” Indeed, Shopify’s focus has been on smaller merchants, but it’s steadily expanding its reach to larger firms. Such an expansion could be a big deal, as the firm looks to accelerate growth again.
I think Mr. Boone is right on the money. Big business is a big deal, and it could help Shopify keep trending higher, albeit in a choppy fashion. If you’ve got a stomach for wild swings, I’d not hesitate to average into the name here and on any other steep pullbacks over time. For long-term thinkers, the volatility in the name is a good thing.
The Foolish bottom line on Shopify stock
Shopify and the broader tech basket are bound to take more hits as the recession rolls around. That said, the long-term trajectory still looks fully intact. And once the Fed has a chance to hint at a pivot, Shopify stock may already be flirting with $70 per share.
