Is Shopify (NYSE: SHOP) Still A Buy At $1,000?

Monday, November 23, 2020 | Sam Quirke
Is Shopify (NYSE: SHOP) Still A Buy At $1,000?Back at the start of 2020, few on Wall Street could have imagined that shares of Canadian e-commerce giant Shopify (NYSE: SHOP) would be trading above $1,000 by the time Q4 rolled around. To be sure, they were on an upward trajectory that made the eventuality almost a certainty but having only popped above $500 for the first time in February, it was still going to be a tall order.

Then came COVID and for a few dark weeks in March, even the most optimistic bulls had to concede that they’d be lucky to finish the year flat after a 40% drop. But the stock market is a funny thing and investors are even funnier. As the effects of the pandemic rolled over the economy, they realized the massive upside potential that was suddenly in play for any stock that had e-commerce in its description. Amazon (NASDAQ: AMZN), Alibaba (NYSE: BABA), and Wayfair (NYSE: W) all caught strong bids into the start of April and Shopify was no different. Their cloud hosted platform allows individual, typically independent, retailers to create online stores out of the box. And with more people than ever before suddenly forced to shop online, it’s not surprising that demand for the services exploded.

But since crossing the $1,000 mark for the first time in July, shares have been relatively range bound and appear to be consolidating at a new normal. With hopes increasing for a COVID vaccine to become widely available by the middle of next year, what kind of upside potential remains for an e-commerce company that’s almost tripled its market cap this year already?

Fresh Upside Identified

If the moves of the big boys on Wall Street are any indication, then there’s a ton of reasons to be excited about where Shopify could go in 2021. Both Tudor Investment and Lone Pine Capital reported increased stakes in shares of Shopify in their 13F filings this month. Having rode the wave this summer, they’re bullish on the upward momentum sticking around for a while yet.

And late last week, Jefferies were out with an upgrade to Shopify shares, moving them from Hold to a Buy rating. In a note to clients they said “we have a greater appreciation for Shopify’s ability to deliver robust growth for the next several years and reach ~$10B of revenue in 2025 powered by a structural pull forward in e-commerce activity and better monetization of gross margin value."

This is exactly the kind of fresh outside momentum investors would be looking for in an e-commerce company as we head into the busiest season of the year for retailers. The company’s President Harley Finkelstein spoke to this point last week when he observed how much consumer habits have changed in the past year. On the whole, he believes the coronavirus pandemic has catapulted the e-commerce industry 10 years ahead of where it was expecting to be, and this acceleration is only going to increase through the end of the year.

Almost 100% Revenue Growth

In terms of internal momentum, we need only look at the company’s most recent earnings report, released at the end of October, to see just how hot that is right now. Aside from knocking analyst expectations out of the park, revenue was up more than 96% year on year and expectations will be equally high for the holiday season to deliver another knockout report in January.

For investors thinking about getting involved, shares are just starting to move up off solid support at the $900 level and look set for a re-test of the upper $1,120 mark as an initial target. The recent bullish comments from Wall Street heavyweights and the beginning of the biggest retail season of the year should be more than enough to send them to fresh highs before 2021 rolls around.

Is Shopify (NYSE: SHOP) Still A Buy At $1,000?

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7 Semiconductor Stocks Set to Gain From the Chip Shortage

Who knew that something so tiny could create such a big problem? However, that’s the case with the semiconductor industry. Chip manufacturers are facing supply chain disruptions due to the Covid-19 pandemic.

Semiconductors are in high demand for the big tech companies who need the chips to power the servers for their data centers. But they are also needed for much of the technology we take for granted including laptops, tablets, mobile phones, gaming consoles, and automobiles – a sector that seems to be at the root of the current crisis.

Any weekend mechanic knows that even traditional internal combustion cars are heavily reliant on electronics. In fact, electronic parts and components account for 40% of a new, internal combustion vehicle. That’s more than doubled since 2000.

However as it turns out, some manufacturers may have overestimated how soon consumers would be ready for an “all-electric” future. And that meant that they didn’t forecast how much demand there would be for the kind of chips needed to do the mundane, but vital tasks of steering, braking, and even powering windows up and down.

Part of the problem is that U.S. businesses are heavily reliant on countries like China and Taiwan for their semiconductors. In fact, only about 12.5% of semiconductor manufacturing is done in the United States.

Of course, this creates a tremendous opportunity for the companies that manufacture these chips. And it comes at a good time. The semiconductor sector is notoriously cyclical and was coming down from the elevated demand for the 5G buildout.

In this special presentation, we’ll give you a list of seven semiconductor companies that you can invest in to take advantage of this opportunity.

View the "7 Semiconductor Stocks Set to Gain From the Chip Shortage".

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Shopify (SHOP)1.2$1,241.54+3.3%N/A790.79Hold$1,318.10 (AMZN)1.7$3,400.00+0.6%N/A99.56Buy$3,944.57
Alibaba Group (BABA)2.3$241.89-0.9%N/A34.70Buy$321.52
Wayfair (W)1.3$318.29-0.5%N/A-45.60Hold$296.17
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