Shopify (TSX:SHOP) is, without a doubt, one of the most popular stocks on the TSX, especially among growth investors. There are many investors on either side of this company — the bears and the bulls — which leads to a lot of eyes on Shopify on a day-to-day basis. Over the past month, it appears that the bears may be a bit happier, with the stock dropping a bit in value. However, as the title says, the bears have had the last laugh so far, with Shopify stock gaining about 45% in 2023 so far.
With that said, is Shopify a buy today? Letâs take a deeper look at the company to determine whether investors should be buying this stock today.
A bit of a background on Shopify
A bona fide blue-chip stock, Shopify leads one of the most intriguing industries. It is one of the worldâs largest e-commerce companies. Shopify provides merchants of all sizes with a platform and many of the tools necessary to operate online stores. In fact, Shopifyâs service offering is so extensive that large-cap enterprises like Netflix have been known to use this companyâs platform. Itâs estimated that more than one million merchants around the world use Shopify to power their online stores.
How has the company performed?
In Shopifyâs second-quarter (Q2) 2023 earnings presentation, the company reported US$1.7 billion in quarterly revenue. That represents a year-over-year increase of 31%. Those are very impressive figures for a company that many people think is past its best. A lot of Shopifyâs revenue comes from recurring sources. This gives the company a very stable and predictable revenue base, which it can use to help fund growth in the future.
In the same earnings presentation, Shopify reported that it managed to bring in US$444 million in revenue just from subscription solutions alone. This is also very promising if youâre a prospective investor in this company because strong recurring revenue should be seen as a must for any stocks that are up for consideration in your portfolio. Over the past five years, Shopifyâs monthly recurring revenue has grown at a compound annual growth rate of 32%.
These results may have had a hand in helping Shopify stock gain as much as it has so far this year. With a gain of 45% on the books so far, investors will hope to see it continue to soar through to the end of the year, thanks to its busiest season (e.g., the Christmas season).
Should you be buying this stock in October 2023?
In my opinion, Shopify would be a great addition to a growth stock portfolio. As mentioned previously, this company is a world leader in a very intriguing industry. In addition, although itâs a Canadian company, Shopify has managed to reach a type of global presence that very few Canadian companies have ever been able to do. That could give investors some exposure to different geographic regions, adding a bit of diversification to their portfolios.
In summary, Shopify is a tremendous company with an even more impressive global reach. It has been performing very well from a financial standpoint, and I think investors could do well holding it in their portfolio.
Before you consider Shopify, you’ll want to hear this.
Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in October 2023… and Shopify wasn’t on the list.
The online investing service they’ve run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 25 percentage points. And right now, they think there are 5 stocks that are better buys.
See the 5 Stocks
* Returns as of 10/10/23
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