The so-called “roaring 20s” environment may be in for a return as central banks look to reduce interest rates further into 2025. Undoubtedly, it’s tough to tell how quickly the Bank of Canada will trim rates from here, given the tariff threats that could easily take a further bite out of the loonie. In any case, a slower rate-cut schedule or pause of sorts seems likelier, in my opinion, as the U.S. Federal Reserve (or the Fed) looks to catch up with rate reductions of their own.
Either way, Fed chairman Jerome Powell made it loud and clear that the Fed is in no rush to cut rates and further reductions could be “gradual.” Indeed, it’s tough to tell whether the Fed will cut more times than the Bank of Canada next year, given the unique slate of risks.
Either way, I do think that the Canadian and U.S. economies can fare well, even if the rate cuts come in just a tad more infrequently.
Black Friday and Boxing Day of 2024 could be solid.
With consumers fresh off spending on Black Friday 2024, questions linger as to where retail sales head from here. Indeed, there have been notable signs that the consumer is still willing to spend if there’s a good deal to be had. And though only time will tell how they react after Black Friday and Boxing Day, I do think that the years of inflation and tough times could be conducive to higher consumer spending at some point down the road.
Of course, there are always risks that could present themselves, causing consumers to put their wallets away and delay big purchases for a while longer. Either way, I think the e-commerce firms are looking pretty enticing at current valuation multiples. Though I have no idea if a “roaring 20s” environment will kick off again, I must say I’m a fan of the longer-term trajectory as the e-commerce firms move past what can only be described as a rough patch.
Also, it’s really hard to tell what stocks are set to soar over a near-term timeframe, given all the unknowns and potential pitfalls we may not see today. So, if you’re going to bet on an e-commerce stock, do be ready for bumps in the road, which may include a new year sell-off of sorts, as you look to invest for the long haul.
In short, the following name, I believe, appears timely going into the new year. However, I view them as best held for at least four years.
Shopify
Shopify (TSX:SHOP) stock has been riding higher in recent weeks, thanks in part to an incredible quarterly earnings result which, I believe, is not just a one-off. Going into 2025, I think Shopify could have even more surprisingly good results, especially if digital retail picks up traction.
Recently, Scotia Capital analysts said that Shopify was one of the names that could see even more Black Friday upside. I couldn’t agree more. If digital retail is coming back in a big way, it will be tough to stop SHOP stock in its tracks. As always, buying after melt-ups in a stock accompanies a high degree of risk.
However, if you’re in it for the long run, SHOP stock still seems worth nibbling into, especially as some bullish analysts, like Kevin Krishnaratne, look for the name to “move higher to close out the year.”
