As the “sell in May and go away” headlines come flooding in again, as they seem to do every year, investors may wish to take a step back and consider the big picture. Undoubtedly, April was an incredibly hot month for stocks, and odds are, May won’t quite live up to the explosiveness of last month’s market-wide run. With technology stocks (perhaps with the exception of some corners within software) leading the way, investors must ask themselves where they believe there’s still relative value out there.
Of course, buying after one of the hottest months in stocks isn’t the best way to land the absolute best value for your investment dollar. But if you’ve got paycheques coming in, I think there’s no reason not to continue putting it to work, whether you’re a passive buyer of the indices (like the TSX Index or the S&P 500) or a self-guided stock picker.
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Looking for value in a hot TSX Index
In any case, this piece will look at some of the names that aren’t quite as hot as the rest of the market. Of course, buying laggards might not be a winning strategy if there are fundamental issues at play. That said, in the case of the following names, I view them as more victims of their own past successes. And as their pullbacks exhaust out, my guess is that they’ll be back on the bull track.
Of course, it’s the long-term runway that has me most enticed, especially at these modest valuations. In my view, I’d rather have a great stock with strong fundamentals that’s down 3-5% from its all-time high than a name with a narrowing moat and decaying fundamentals for a double-digit percentage discount.
As others opt to sell in May, I think being cautious and picking spots is the way to go. Even if May gives back some of the impressive ground from last month, I’m still a fan of the price of admission into some of the high-quality Canadian names, which may have yet to live up to their full potential.
Shopify
Shopify (TSX:SHOP) stock is down close to 20% year to date, but with a floor of support that’s not all too far away from $170 per share, I think it’s time to give the fallen commerce enabler a second look, especially as agents look to become more than just another AI buzzword.
It’s nice to think about the size of the total addressable market that agentic commerce could unlock. But as we move into the second half, investors are going to want to see some results in the form of greater growth and profitability metrics. Of course, it’s hard to time when agentics will start raising some of the hard-hit names in software, but I do think that today’s multiples represent a fair price to pay for one of Canada’s best AI-driven innovators.
Even if agentics don’t work their way into the results this year, I do think that Shopify remains compelling from a longer-term perspective, even if AI uncertainties linger while the consumer gets pushed into a more uncertain spot as inflation makes its return and the employment picture makes its next move.
