Given the current scenario of the Canadian stock market, investors seek stocks that can offer them the best market-beating returns. Nevertheless, to do this, you must select a growth stock with strong fundamentals and long-term growth plans to outperform its competitors. One such stock on the Toronto Stock Exchange is Shopify (TSX:SHOP), which has the potential to become an absolute juggernaut in its industry over the coming years.
Here’s why I think this stock is a buy below the $100 level right now.
Strong long-term strategy
As a leading e-commerce platform provider, Shopify’s long-term growth strategy is relatively easy to understand. The company enables small- and medium-sized businesses to set up online shops, earning transaction fees on the gross merchandise value that flows through its platform. This leads to very steady cash flows, making Shopify a top software-as-a-service stock long-term investors continue to invest in for long-term growth.
Shopify’s cash flow profile has been resilient and consistent throughout recent years. This helps investors get a clear picture of the stock’s future performance. Furthermore, Shopify’s secular tailwinds continue in earnest despite its fall post-pandemic. The company’s innovative technology enables merchants to design, manage, market and sell their services and products in multiple market cycles.
Excellent financial performance
Shopify reported a total revenue of $7.1 billion in 2023, a whopping rise of 26% from the last financial year. The company’s merchant solutions increased by 27% to $5.2 billion, and subscription solutions grew by 23% to $1.8 billion. Shopify made a gross profit of $3.5 billion in 2023, a rise of 28% from the previous year’s $2.8 billion.
The positive presence of Shopify in the market makes it one of the best stocks you must seek to invest in 2024. Furthermore, Shopify witnessed an increase of 120% in its stock price in 2023 and plans to increase it in the upcoming years. So, if you plan to invest in this company when its stock price is at $80, it will still be the best buy, as the company can deliver positive returns to its shareholders. Hence, these attractive statistics of Shopify make it one of the top-performing TSX Composite components.
Should you invest in SHOP stock while it is below $100?
The recent earnings report of Shopify showcases the strength of its overall business model. Despite its performance at the beginning of 2022, investors may look at it now through a different view. Over the past five years, Shopify Inc.’s stock price grew by 200% from where it started, providing investors with a 24% compound annual growth. Few companies on the Toronto Stock Exchange have the potential to offer dividend returns, like Shopify, in a bull market.
Shopify has gained enormous traction in the United States, accounting for 28%, and the company plans to increase its sales by 10% annually till 2028. In the offline market, the company has taken over 2% of retail sales in North America and 0.5% globally. Nevertheless, the company has multiple sectors to explore, which will help it enhance its business and become an industry goliath.
I think the company is well-positioned to capture market share long-term, and Shopify remains a top pick of mine for growth investors thinking long term. At below $100 per share, SHOP stock certainly looks like a buy to me.
