Investors looking to put $10,000 to work in this market certainly have plenty of options to choose from. That’s not quite a large enough sum to buy a single Bitcoin or a share of some of the highest-priced stocks in the market. But the good news is that most companies trade well below this threshold, and this relatively small sum can turn into very large gains over the long term, if invested in companies that can grow at a rate that beats the market.
Shopify (TSX:SHOP) is one such e-commerce giant I think has such growth potential. I’ve been bullish on this company for quite a long time and have shifted my thinking about how the e-commerce space may transform over the years to come. Much of this perspective shift has driven my take that Shopify will likely be an outperformer that’s worth adding at current levels before it takes off.
Here’s why I remain so bullish on Shopify, and why I think this is the place for investors to consider putting $10,000 to work in this market right now.
A business model with sustainable growth potential
Finding a growth stock that’s performed well in the past really isn’t that difficult of a task. Over the better part of the past two decades, many top high-growth stocks have outperformed the market and led the past bull market rallies to incredible levels.
Indeed, Shopify has been one such stock that’s provided incredible returns. But it’s the company’s business model I think that provides this growth, and this growth is likely sustainable over the long term. That’s why I think this stock is positioned to outperform.
As a leading provider of a suite of software products allowing small and medium-sized businesses to set up online shops, Shopify benefits from the surge in e-commerce demand and a shift away from traditional retail. For those who think physical retail is back in vogue and companies aren’t looking to expand their online presences, this article won’t help you. But for those looking to invest for a future in which all companies have their own online presences and focus on expanding their digital footprint, Shopify’s dominant market position in allowing autonomy in the e-commerce space could provide incredible growth.
Serving more than 2 million merchants around the world, Shopify is now responsible for $67.2 billion in gross merchandise value in this vertical. That’s second to only Amazon, positioning Shopify well in the race for e-commerce dominance over time.
Historical returns likely to continue
For those who think the secular growth trends underpinning the e-commerce space are likely to continue, Shopify does have some strong growth tailwinds worth considering. Over the past five years, this stock is up more than 150%, despite an incredible dip following the post-pandemic rally that took Shopify to all-time highs. If the stock gets back to its previous high (which I see as likely over the medium term), this is a stock with more than 100% upside from here.
I think that as Shopify continues to grow at a more steady and reasonable state, this is an e-commerce giant that’s likely to benefit from strong growth prospects in the future. As of Q2 FY25, Shopify’s revenue has increased by 21% to $2 billion, while its gross profits have increased 25% to $1 billion.
As more businesses turn to Shopify to grow their online presence, Shopify is all set to grow because of the increase in e-commerce spending around the world. Moreover, Shopify has diversified its business by expanding into financial services with Shop Pay and Shopify Payments. In Q2 FY25, the company grew its merchant solutions income by 19% to $1.5 billion, driven by the popularity of Shopify’s payments.
