As the world shifts to digital payment and cloud storage, several companies are looking to become dominant players in this field. These growth stocks are in growing demand among many investors seeing big-time returns.
As 2024 unfolds, take a look at two such popular stocks that are a must-have in your portfolio this year.
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Shopify
Shopify (TSX:SHOP) is a globally prominent e-commerce company offering a digital platform for merchants and customers to connect. To empower more businesses, this company offers several tools to sellers on its platform to better market themselves.
With Shopify, buying and selling have become quicker, more efficient, and reliable. The users of this platform can customize their settings according to their preferences and enjoy a smooth shopping experience online. Shopify bridges the gap between merchants and customers actively in 175 countries.
On December 13, 2023, Shopify introduced new features that can help developers add essential functions to customer accounts. Investors and analysts witnessed a bullish phase for the SHOP stock over the past year. The company’s growth during this period has surged, improving Shopify’s valuation and making this a top destination for many growth investors.
With a 39% compounded annual growth rate (CAGR), Shopify has generated 415% returns for investors in the past five years. Shopify’s higher total merchandise volume numbers and continuous shifts into various business models are driving forces for its growth.
With the ongoing shift among audiences to digital shopping, Shopify stands well positioned to provide big returns this year. For those seeking a way to play the long-term secular trends behind the e-commerce sector, Shopify remains a top choice.
Lightspeed Commerce
Lightspeed Commerce (TSX:LSPD) provides cloud software subscription and payment solutions for small and medium businesses. Lightspeed’s cloud platform is equipped with back-office operation, omni-channel experience, and payment facilities. The company offers a platform for businesses in North America, New Zealand, the United Kingdom, and several North American and European countries.
During the second quarter (Q2) of 2023, this company witnessed higher growth in its revenue compared to that of the previous year. According to its most recent report, Lightspeed’s year-over-year revenue growth rate came in at a healthy 25% over the previous three years. The company earned more than $230 million during this period owing to this revenue increase.
However, Lightspeed’s share price hasn’t fully caught up to its growth rate. Despite strong top-line growth, the company’s shares have traded relatively rangebound over the past year, though approaching the upper end of the bound.
For those betting on a rebound in hyper-growth stocks, this is a company to keep an eye on. Lightspeed is still far from profitability, but it’s a name many Canadian growth investors are familiar with. That could be enough to spark yet another rally if the hype returns to this space.
Which is the better pick?
Coming to the question of which is the better option between Shopify and Lightspeed, the answer is really subjective. While Shopify is clearly the larger and likely to be more profitable option in the long term, over shorter-term time horizons, it’s certainly possible Lightspeed will outperform. After all, this is a company with a much smaller market capitalization and more upside with respect to growth catalysts.
That said, my longer-term bet would be on Shopify. This company’s size and scale are unmatched in the Canadian tech scene. For those seeking a growth stock with true staying power, this would be my preferred pick.
