Investors might be forgiven for thinking that after a 200% run in just 6 months, a stock might be ready to tap out for the year and begin to consolidate. But for shares of Shopify (NYSE: SHOP)
, it looks like they’re just getting started
It’s certainly been a year of years so far for the $125 billion e-commerce company. They came into 2020 at all time highs after a blistering 200% run in 2019 but they look set to beat that this year already. The coronavirus pandemic has in many ways been a cloud with a very silver lining for them. Aside from being responsible for what we can now look at as a temporary crash in March, it has for the most part been a major revenue driver.
With more people than ever before having to shop online, supply has had to match demand and Shopify’s easy to use e-commerce solution allows individuals and businesses to get started with an online store.
Big Revenue Jumps
Their Q1 revenue, reported in May, was up 46% year on year and gave investors a taste of what was coming. Q2’s numbers, reported in July, confirmed the rocket had taken off. Revenue was up more than 97% year on year and even more impressively, was 40% higher than analyst expectations.
As investors look ahead now to the next earnings report coming down the line in a few weeks, it’s only fair to be asking how much more upside can be baked into the current share price. Based on recent headlines, however, the answer is plenty.
On Wednesday, Wedbush Securities upgraded Shopify shares to Outperform from Neutral and pushed its price target up to $1,300. That implies the guts of a 30% move from yesterday’s closing price and would put shares well above August’s all-time high. Analyst Ygal Arounian is particularly bullish on the company’s ability to continue capturing market share as its total addressable market continues to expand.
Solid Market Share
His comments echoed those from Goldman Sachs last week who maintained their bullish outlook on Shopify stock while also raising their price target above the $1,300 level. In a note to clients they said “we believe the steady growth in value-added services offered by SHOP has significantly expanded the company’s opportunity per merchant.”
Only earlier this month the company raised close to $2 billion in convertible notes which shores up their cash reserves and strengthens their balance sheet. Investors should be confident in management’s ability to continue to execute strategies which have resulted in the growth seen to date.
That doesn’t mean that a position in Shopify stock comes without risk. There have been voices calling for caution for some time now as the company’s valuation has stretched to eye watering levels. By one measure, Shopify must do 5x the e-commerce sales that Amazon (NASDAQ: AMZN) did in 2019 simply to justify its current valuation. And while Shopify might be the belle of the ball right now, competition in that space is growing and growing fast.
However, the optimistic investor might consider competition like this to be a good thing. Maybe if the likes of Macy’s (NYSE: M) had had a little more of it in recent years or reacted a bit better their stock wouldn’t be close to all time lows. There’s plenty of catalysts for Shopify investors to get excited about as we head into the last quarter of the year. Even with shares up 200% since March, there’s every reason to think they’ll be even higher by next March.
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7 Gold Stocks to Buy Before the Fed Changes Its Mind
Just when investors thought that the price of gold couldn’t go any higher, the Federal Reserve added fuel to the fire. On July 29, the Fed said there was not sufficient evidence of an economic recovery to warrant changing their current policies.
Not only does that mean that interest rates will stay at or nor zero, but that the Fed may initiate other actions as well. In his statement after the Fed meeting, chairman Jerome Powell said the Fed was “not even thinking about thinking about raising rates.”
And while the novel coronavirus was certainly a factor, it’s not the only factor. The Fed is looking intently at the collateral damage from the lockdown measures in March and April. Over 14 million Americans who had jobs in February are unemployed. And many of those jobs will not be coming back.
This is creating the perfect scenario for gold and gold stocks. The price of gold has surged over 25% in 2020. At the time of this writing, it sits at $1,953 per ounce. Of course as soon as gold starts to near $2,000 the cries that the rally is over begin.
Are they right again? Maybe, but I’m a little skeptical. Gold always climbs during times of uncertainty. That’s true today more than ever. We’re months away from a presidential election. We’re learning how to live with a novel virus for which there is no vaccine. We have social unrest that has turned into riots in many major cities.
With that in mind, here are seven of the best gold stocks that you can invest in right now.
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