Shopify (TSX: SHOP) stock’s year-to-date run has been simply sensational, with shares up nearly double over the timespan. Despite the scorching gains, shares of the Canadian e-commerce stud are still nowhere near all-time highs. Still, such highs aren’t all too far out of sight anymore, so Tax-Free Savings Account (TFSA) investors may wish to buy amid newfound momentum. The real question is whether Shopify can continue claiming more of the enormous total addressable market in the small- and medium-sized business (SMB) scene while winning enterprise customers.
Personally, I’m comforted that the firm is moving away from logistics. Fulfillment is an arena that takes considerable effort and money to dominate. And with behemoths like Amazon investing heavily in the market, I simply did not see Shopify gaining a magnificent return on its investment from its foray into logistics.
There are far better places for the e-commerce kingpin to invest. From payments to generative artificial intelligence (AI)-driven features, Shopify has so many areas where it can innovate to drive growth. As AI continues to take off, while virtual and augmented reality (VR and AR) begin to pick up traction over the next five years, I view Shopify as a firm that may still have some glorious days ahead.
Shopify stock: The perfect tech buy for a TFSA?
Did the stock overextend itself way back in 2020 and 2021? In a prior piece, I’d warned investors that the stock was at high risk of a substantial pullback. Eventually, the stock imploded and overswung to the downside, as pessimism and dread began to set in for shareholders.
With a fresh slate, newfound efficiencies, and some compelling potential growth levers to pull, Shopify hasn’t looked this intriguing from an investment perspective in many years. Of course, it would have been nice to be a buyer when shares were below $40. However, I still don’t view Shopify as absurdly valued.
The stock looks either fairly valued or slightly undervalued at just shy of $100 per share. When you consider the growth potential over the next 10-15 years, however, there may be a chance that SHOP stock could still prove severely undervalued right here. But if you want to pick up shares at near 52-week highs, you’ll have to brace yourself for extreme bumps in the road as we head into a potentially choppy 2024.
Shopify stock: All the makings of a shining growth gem
Looking ahead, I’d look for Shopify to sprinkle a bit of generative AI across more aspects of its business. The possibilities are almost endless, from customer service chatbots to AI-driven advice to help merchants increase sales. Shopify’s massive network of merchants, I believe, is an excellent source of strength for the firm as it looks to roll up its sleeves and turn AI into a monetizable technology that may very well help Shopify become an absolute growth superstar in a couple of years.
Does it have effective leadership? Check. Tobias Lütke is a genius and visionary founder who has innovation in his veins. Does it have a large, swelling total addressable market? Check. From payments to future AI features, Shopify’s growth runway seems as long as ever.
Bottom line
Shopify has all the makings of a genuinely wonderful growth company. The only question that remains is how long before digital retail sales take off again. If you’re in it for the long term, I think the timing doesn’t matter all that much. So, if there’s a spot in your TFSA, Shopify stock may be a solid pick-up at less than $100.
