Better Buy: Shopify Stock or Apple?

Shopify (TSX:SHOP) and Apple (NASDAQ:AAPL) may have stumbled this month, but their dips may be worth watching.

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The broader stock market is stalling for the month of August, with various big year-to-date winners taking a much-needed breather. Shopify (TSX:SHOP) and Apple (NASDAQ:AAPL) stock have been on a heck of a run this year. And though their respective plunges may be a slight cause for concern, I think it’s a mistake to count either name out of the game just because they’ve fallen on harder times.

In this piece, we’ll have a closer look at shares of e-commerce darling Shopify and iPhone maker Apple to see which, if either, stock is worth your attention amid their latest dips off recent peaks!

Shopify stock

Shopify stock took a hit to the chin, even after the company reported some pretty good earnings estimates that topped the estimates. Undoubtedly, investors probably expected a bit more from the company given the massive 89% year-to-date surge.

Whenever you have a red-hot stock going into earnings, investors tend to be unforgiving and very demanding when it comes to the actual results. Further, above-average results may not be enough to move the needle if there’s a lack of a huge guidance revision to the upside.

For the second quarter (Q2), Shopify reported earnings per share of $0.14, ahead of the $0.05 estimate. A pretty solid beat, if you ask me.

When it comes to Shopify, there was already a lot of good news priced in. The company’s sale of its logistics businesses, mass layoffs, and various other big moves regained the confidence of the markets many months ago. Even as Shopify lightens up, “the new shape of Shopify,” as Shopify President Harley Finkelstein previously noted, may need a bit more to keep up with the pace of recovery gains we’ve witnessed lately.

Indeed, the second quarter may have already seen some of the benefits from Shopify’s recent moves. However, whenever there’s perfection priced in, it can get really hard to keep impressing. Fortunately, I think the solid Q2 is just a sign of things to expect as the company returns to its roots.

The real upside, I believe, could come from an uptick in consumer spending. Recession or not, I think consumer spending is well positioned to recover over the next 18 months. That bodes for Shopify as well as the rest of e-commerce.

Apple stock

Like Shopify, Apple got punished following the report of some good earnings results. For the third quarter, Apple clocked in earnings per share of $1.26, above the $1.19 estimate. Still, the quarter was certainly not rich with growth. For a stock trading at north of 30 times trailing price to earnings, investors demand quite a bit from the tech titan.

Fortunately, I think Apple will have little issue bouncing back from its post-quarter slump. Why? Apple’s latest and greatest devices are just over a month away from being revealed. As Apple unveils products such as the iPhone 15 and the special Apple Watch X, my guess is that consumers will be ready to hand over their money. Perhaps the coming product pipeline could put Apple’s growth woes to rest!

My takeaway? Don’t bet against Apple after the latest post-quarter move lower. It looks like a long-term winner that’s just having a minor bump in the road.

Better buy: AAPL or SHOP?

I like both, but if I had to pick one for September, it’d have to be Apple. Yes, the multiple is still rich, but perhaps a September keynote could re-ignite enthusiasm.

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.

Fool contributor Joey Frenette has positions in Apple. The Motley Fool has positions in and recommends Shopify. The Motley Fool recommends Apple. The Motley Fool has a disclosure policy.

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