After an outstanding year for the TSX Index, it’s easy to think about the stocks you’d be willing to sell. After all, it’s only smart to ring the register while you’ve got significant profits in hand. And while your list of winners might seem tempting to trim or even sell out of, I do think that investors who don’t need to raise money today might wish to reconsider dumping their winners, perhaps for a slate of losing stocks that could be destined for more subpar performance.
Undoubtedly, just because a stock has gained more than 30% in the past year doesn’t mean those gains are going to be given right back. If the value remains (think about traditional valuation metrics such as the price-to-earnings (P/E) ratio) and you’ve still got a long-term horizon (three years or more), it makes little sense to sell a stock just because it’s had a run.
If anything, it might make more sense to rotate long-time laggards for shares of a firm that’s gaining traction, provided that you’re paying a fair or low price relative to your estimate of its true worth. While you may not want to take a page out of the momentum investor’s playbook, I still think that there’s more to whether a stock is a buy or a sell than how its one-year chart looks.
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Shopify has an AI catalyst and might be worth sticking with
Consider shares of Shopify (TSX:SHOP), which have been a big gainer in the past year, rising around 50%. With the tech sector recently dipping and the shares of SHOP taking a 6% hit to the chin on Wednesday, I wouldn’t rush to panic with the expectation that last year’s big gains are going to be wiped out in some sort of spectacular AI bubble-bust scenario.
Though a stock market crash can still happen, a far less-shocking event might unfold, perhaps one that sees stocks drag their feet while the tech sector steadily gravitates lower, while experiencing huge volatility in both directions. In such a climate, it could prove very difficult to tell what’s real value and what’s a name that deserves to be punished.
Personally, I find Shopify stock to be one of the names to stick with, even if volatility surges, provided you’re a growth investor who’s lived through 20–30% declines before. Panic-selling can and probably will happen at the worst moment, but if you’re all about the long term, I do think there’s an opportunity to snag a sizeable discount when Shopify, an e-commerce titan with a wide economic moat, could be underpriced.
Though SHOP stock might not yet be severely oversold, I do think a window of opportunity to snag shares at a decent entry point could arise in the coming weeks and months.
AI shopping could be a big deal
Undoubtedly, AI is a big deal for Shopify’s growth story. And with analysts over at Scotia recently upgrading the stock, noting that AI shopping trends could provide a material earnings boost, I’d be inclined to get greedy should other investors become more fearful of Shopify stock.
Of course, agentic AI and buying via chatbots could create a world of growth for Shopify. But the real long-term upside, I think, lies in what could happen if the model (no pun intended) proves to be a new way for people to shop online. With a great platform in place and a world of AI-using shoppers who could embrace AI shopping, I certainly wouldn’t be inclined to dump Shopify shares, even though they may seem expensive today.
