Is Shopify Still The Best Stock To Buy For Canadian Investors?

Investing is a notoriously complex business. Many factors can influence whether your hard-earned dollars will gradually increase in value or drop like a stone. Even economists with many years of experience and expertise behind them can’t always predict which way the markets will turn. So, what chance does the person on the street have?

So, What are Those Factors?

While it would be impossible to list them all, the first is the general state of the economy. When inflation is running high, and the future is looking uncertain, this makes the markets jittery. Similarly, a fall in a country’s GDP can have an equally deleterious effect. 

Bringing it down to the micro level, a particular sector’s performance can also have a reducing effect on stock prices. To take insurance as an example, after a particularly severe hurricane and storm season, when there are many home insurance claims to settle, profits will fall along with the value of the insurance companies.

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On the other hand, there are just as many factors that can make stock prices rise. These include proposed and actual mergers and takeovers or stellar performance from a company. 

Sometimes, the latter can come from the passing of legislation that frees up a market. That’s similar to the recent changes to gambling laws in Canada. The result can be evident in the rising stock prices of many organizations behind the best casino apps in Canada at a site like Casino.ca. Stocks in relatively new sectors like iGaming and online shopping also prove to be good long-term investments. Besides, experts often recommend those stocks.

Why Shopify?

A prime example is Shopify. For a long time, this stock has been a darling of investors. There are some very good reasons for that.

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1. It’s growing

Shopify is a business that seems poised for growth. The more merchants it can bring on board, the better the service is going to be. Its current number of merchants is around 2 million, which also involves many third parties. 

It has already reached a critical size, making it hard for competitors to get close. It has also gathered huge amounts of commercially useful merchant and transaction information that puts it in a unique position.

2. It’s popular with merchants

In the e-commerce world, it might seem like e-commerce giant Amazon rules the roost. Although merchants do sell through it, they are not always happy with Amazon slashing margins to the minimum. They even find themselves being undercut on price. 

However, Shopify is only a products and services business. So, its success hinges on the success of the merchants who use it. In short, it’s a virtuous circle.

3. Its management is switched on

Back in 2022, Shopify blew over $2 billion on a logistics business called Deliverr. It hoped that this would help them compete on a more equal footing with other companies offering order fulfillment. When it failed to live up to expectations, the management was quick to act and sell it. 

Minimizing assets has helped it generate free cash flow, which it directed toward shareholders in the form of dividends. Moreover, investors are always on the lookout for stocks that promise them generous dividends.

4. It’s set for major growth

Looking forward to the next few years, there are plenty of reasons to be bullish about the growth of Shopify. Analysts in the sector have predicted an annual growth rate of 20% a year for the next few years. 

In terms of the company’s share price, it can considerably outstrip that figure. It might show an annual rise of up to 33% a year for the next three to five years.

Here is Why It Could Be Worth Waiting to Invest

Shopify is undoubtedly a good potential investment over the medium to long term – generally considered over 3 years or more. It could be that the price could dip a little from its current levels. 

Much of this has to do with the slightly uncertain economic climate that could affect merchants. If they are, it will have an inevitable effect on Shopify and its share price.

If and when the stock price dips, it will be the time to swoop. Be confident that your gains will be higher in the long run.

Of course, as with all investments, it’s also important to remember that their value can always fall as well as rise. That said, Shopify is and will continue to be a sound choice in the future.