With the explosive upside surge we’ve seen in the broad markets in the past few weeks, questions linger as to whether or not the growth trade (led by AI) has enough gas in the tank to take the S&P 500 and TSX indices to even higher highs. Indeed, if you missed the chance to buy the dip, you might find yourself chasing the same names that you doubted just two short weeks ago.
And while time will tell if growth is back in the driver’s seat of the market rally, I do think that it’s worth checking in on some of the names that have ricocheted but are not yet at new all-time highs. Even as the S&P makes new records, some stocks are still in correction territory, and that’s where the opportunity could lie for long-term investors who want a deal in a market where bargains are becoming even more scarce.
While we can’t turn back time to April Fool’s, when it turned out to be a pretty good opportunity to start doing some buying, we can set our sights on the names that stand to make up for lost time, at least relative to the rest of the market. In this piece, we’ll look at one growth name that may very well be able to give your TFSA portfolio a nice growth jolt while shares are still quite a bit lower than 52-week highs.
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Shopify stock is getting hot again – but a nice discount remains
Consider shares of e-commerce and agentic shopping play Shopify (TSX:SHOP), which has been punished severely amid the market-wide markdown in software stocks. In the past month, the name has clawed back around 9% of its value. And while shares are still down around 26% from their highs not seen since last October, I do think that the setup looks way too good to ignore as we head further into the second quarter, one that might be a whole lot kinder to the higher-multiple growth names with AI tailwinds at their back.
Shopify stock has always been really volatile. Not much has changed about that. But given the growth opportunity to be had from the AI race as the company positions itself to become an agentic commerce enabler (expect the infrastructure needed for AI shopping to really take off), I like the catalysts ahead as well as the price of admission. Where some see software at risk from AI’s disruptive wave, I see a powerful AI-driven agentic commerce enabler that’s well-positioned to rise on the back of a structural shift.
Sure, shares still seem overpriced at 140 times trailing price-to-earnings (P/E). However, given the potential for the agentic growth jolt, I think the premium might be worth paying, provided you’re ready to ride out what remains of the bearish sell-off.
In terms of the technicals, though, I think SHOP stock gets a gold star as we head into the end of April. Shares seem to have a double-bottom technical pattern, which could entail a nice bounce back above the $200 per-share mark. Of course, technicals shouldn’t be the sole reason to buy a stock.
Bottom line
However, when all else aligns (think value, catalysts, and long-term growth story), I think investors should be ready to make a move. With earnings on tap for the start of May, investors might wish to give the name a second look as big tech finally looks to fall back into favour.
