One of the top Canadian stocks many investors continue to focus on is Shopify (TSX:SHOP), and for good reason. The e-commerce giant has provided impressive growth from its IPO, and while this stock is down considerably from its post-pandemic peak, there are signs of life emerging once again and that Shopify could be an outperformer moving forward.
Let’s dive into whether it’s the right time to buy into this recent momentum, or if investors may be better-served waiting on the sidelines for another dip.
Strong fundamentals and growth prospects
As one of the largest e-commerce platform providers in the world, Shopify’s core business model remains among the more attractive in this space. The company’s business model is centred on allowing small and medium-sized businesses to set up online shops. Of course, following the pandemic, this was big business.
Since then, the company’s comps have come down, and its growth has returned. With operations in 175 countries around the world, Shopify allows a global clientele to access an increasingly connected global audience. That’s good for business everywhere, and Shopify’s user and customer counts show just how important its business model is.
Accordingly, investors shouldn’t be surprised to see the company grow its adjusted sales at a 29% year-over-year clip. Shopify’s recent earnings results were impressive, with margins of 12% and free cash flow of US$232 million reported in its most recent quarter. As the company continues to increase its cash flow, its valuation should rise. That’s the fundamental view that many growth investors continue to hold with this high-growth Canadian tech giant.
Growth trajectory remains intact
Shopify has an extensive plan to grow its presence globally. The company aims to increase its revenue by a high-teen percentage rate on a year-over-year basis. Moreover, Shopify’s GAAP operating expense dollars are expected to be up at a low-to-mid-single-digit percentage rate compared to the first quarter of 2024.
The company expects its stock-based compensation to come in around US$120 million and capital expenditures to be US$5 billion. Shopify has a strong market position in the e-commerce industry, innovative techniques and a diversified revenue stream, making it a must-buy stock in 2024 for future financial growth and fulfilling your dreams.
Is now the time to buy Shopify stock?
Post-pandemic, we have seen a significant craze for Shopify, where people are buying everything from this platform. Thus, this sudden jump in online traffic helped Shopify witness an acceleration in its 10-year growth trajectory. As this trend continues, I expect outsized interest to build in SHOP stock going forward.
Indeed, there are few better Canadian growth stocks investors can consider right now. For these reasons and others, Shopify remains among my top picks in this current market.
