Q: Hi
The world seems to be so focused on stocks like GOOGL, APPL, NVDA, TSLA whereas I don’t see a lot of hype around SHOP.
In your mind does SHOP have the inherent appeal to grow at the same rate as the above stocks?
Would you please rank SHOP compared to the rest i.e 1-5,
Thanks
The world seems to be so focused on stocks like GOOGL, APPL, NVDA, TSLA whereas I don’t see a lot of hype around SHOP.
In your mind does SHOP have the inherent appeal to grow at the same rate as the above stocks?
Would you please rank SHOP compared to the rest i.e 1-5,
Thanks
5i Research Answer:
It comes down to the fundamentals and whether a company can grow its earnings and cash flow. We think SHOP has certainly proven itself over the years with revenue growing from $2.9 bln in 2020 to an estimated $11.3 bln by the end of this year. While it might not get as much press as other names, we don't think it gets 'ignored' either, with it trading at a premium valuation and having good returns on its own.
With its 'smaller' size and higher growth rates than most of the mega-cap names, we think the return potential at SHOP can be higher with the offsetting factor being the higher valuation. It will likely come with higher volatility as well though.