|Bid||382.01 x 900|
|Ask||384.00 x 800|
|Day's Range||381.25 - 401.16|
|52 Week Range||117.64 - 401.16|
|Beta (3Y Monthly)||1.33|
|PE Ratio (TTM)||N/A|
|Earnings Date||Oct 23, 2019 - Oct 28, 2019|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||357.48|
Shopify stock has been a huge winner in 2019. Shopify earnings are booming and the company plans to compete more with Amazon. But is SHOP stock a buy now?
Amazon Business could tap 5% of the international e-commerce market by 2021. The global B2B e-commerce market could be worth $9 trillion by 2021.
(Bloomberg) -- It makes up almost 6% of Canada’s stock market and is the best-performing sector this year.That’s right: technology stocks have climbed a massive 59% in 2019 -- more than double the next-best industry group on the S&P/TSX Composite Index. In fact, tech’s share of the benchmark index has grown at the fastest rate among all sectors in the past four years, according to data compiled by Bloomberg.“The tech ecosystem in Canada is very robust,” said Todd Coupland, managing director of institutional equity research at CIBC Capital Markets. “There are some high-quality growth companies that have begun to scale up over the last few years and they’ve gone public, and the success of those companies is manifesting itself in higher share prices.”Read more: Shopify’s Success Puts Spotlight on Next Canadian Tech StarsCanada’s tech sector hasn’t always had a smooth road. Fortunes have ebbed and flowed with the likes of BlackBerry Ltd., formerly known as Research In Motion, and now-defunct telephone equipment maker Nortel Networks Corp.But the S&P/TSX Composite Information Technology Index, with a mere 10 members, is now on track for its seventh year of gains -- its longest winning run on record -- having added C$108 billion ($81 billion) in market value in 2019. In comparison, the S&P 500 Info Tech Index, with 68 stocks, has climbed 29% this year after a 1.6% decline in 2018.Ottawa-based Shopify Inc., which has climbed more than 1,500% since it went public in 2015, is a big part of the success. It has a 39% weighting on the tech sub-gauge and comprises 2.18% of the broader benchmark.“With Shopify getting bigger and bigger, it’s getting more on the radar of larger, more global focused investors,” said Suthan Sukumar, an analyst at Eight Capital. “That is drawing more eyeballs to the Canadian market.”It isn’t just Shopify that’s making waves. Lightspeed POS Inc. -- which boasted Canada’s second-biggest IPO this year and the biggest offering by a Canadian tech firm in almost nine years -- had a stunning trading debut in March. The stock has climbed 175% as the company forecast annual revenue that beat analyst expectations. That performance isn’t reflected in the S&P/TSX Info Tech index, which hasn’t yet added Lightspeed.And another tech company is looking to follow in Lightspeed’s footsteps. Toronto-based Docebo announced Wednesday that it filed documents with regulators for an IPO.With valuations sky-high, it’s worth asking whether the rally can last. The price-to-earnings ratio for the S&P/TSX Composite Info Tech gauge stands at 34.6, compared with the broader benchmark’s multiple of 14.3.Sukumar says he sees opportunity in at least some corners of tech.“There is an opportunity for investors to continue rewarding higher-quality growth and growth that can prove to be resilient in these kind of market conditions,” he said.(Updates story to include the growth in the S&P 500 Info Tech Index in the fifth paragraph.)\--With assistance from Doug Alexander and Matt Turner.To contact the reporter on this story: Divya Balji in Singapore at email@example.comTo contact the editors responsible for this story: Madeleine Lim at firstname.lastname@example.org, Joanna Ossinger, Ravil ShirodkarFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
On its face, Shopify (NYSE:SHOP) stock looks like a bubble, or something close. Shopify stock has risen 190% in 2019 alone, adding almost $25 billion in market capitalization in the process. It trades at 373x 2020 consensus EPS and almost 20x next year's average revenue estimate.Source: BalkansCat / Shutterstock.com In a market that -- in tech in particular -- looks dearly valued, SHOP stock seems like Exhibit A in the argument that U.S. equities have run too far. And yet those analysts -- myself included -- who have decried the stock's valuation have at best missed out on profits and at worst been run over. * 10 Marijuana Stocks to Ride High on the Farm Bill I wrote earlier this month that there was little reason to see the run ending any time soon. This is a momentum play, and that momentum remains intact. As I noted earlier this year, the company's move into fulfillment opens up new opportunities for the company, and for Street growth models. At least one analyst already has jumped on board.InvestorPlace - Stock Market News, Stock Advice & Trading TipsBut those factors don't necessarily answer the broader question here: is Shopify overvalued? To be honest, I still believe that it is, at least from a truly fundamental standpoint. This is a wonderful business, but there are worries about its resilience in a recession. And the valuation incorporates something close to perfection for years to come.That said, it's worth noting that there is a fundamental case here. This isn't a pure bubble, like so many stocks were in the first dot-com era of the late 1990s. It's hard to make the case that SHOP stock is cheap. But looking past the headlines, there is at least a way to justify the current valuation -- and maybe even a bit more upside. How Margin Expansion Can Boost SHOP StockShopify's earnings multiples admittedly look close to absurd, whether it's the 370x+ forward P/E or a 2019 EV/EBITDA multiple likely in the 500x range.But those multiples are impacted by the fact that Shopify's margins are razor-thin right now. Adjusted operating income in 2018 was just 1% of revenue. In the first half of 2019, that figure has held, while improving from a negative 1% print the year before.As those margins expand, earnings are going to grow exponentially even ignoring continued top-line improvements. Operating margins have expanded about 200 basis points (bps) in the first half; if the company repeats that performance in the second half, while posting its expected 43% year-over-year revenue growth, operating income should rise more than 400%.It's not as if Shopify is done with that expansion. Even assuming margins get to 3% this year, there's still a nice path to over 10%. This is largely a subscription revenue business after all, even if gross profit on merchandise sales are much lower. Incremental margins (the profitability of added revenue dollars) should be quite high.Meanwhile, Shopify still is investing in its business, with sales and marketing alone still about 30% of revenue. A more mature business can get that figure down dramatically. Revenue growth will boost gross margins and leverage G&A and R&D spend.Consensus EPS for next year appears to imply a roughly 6% operating margin. Get that figure to 15% and double revenue -- the latter of which Shopify should be able to do by 2023 -- and P/E gets down to a more reasonable (if still very expensive) 70-80x.That doesn't mean SHOP stock is cheap. But we've seen SaaS plays like Salesforce.com (NYSE:CRM) trade at above 40x for years. Fulfillment profits should start arriving a few years from now. At the least, Shopify stock can go from being "absurd" to simply being expensive. That might be enough. Comparing SHOP Stock to AMZN StockThere's another way to look at Shopify's valuation that makes it seem at least potentially reasonable. According to estimates cited in Shopify's most recent presentation, Amazon (NASDAQ:AMZN) has 47% share of U.S. eCommerce. Shopify has one-tenth that penetration, at 4.7%.It's too simplistic to argue that Shopify, then, should be worth roughly one-tenth of Amazon, or almost $90 billion. Amazon's valuation, of course, includes Amazon Web Services, which one analyst believes could be worth $500 billion. Amazon's greater scale should be more valuable. And, of course, Shopify's market share doesn't actually come from the company, but rather its merchants. Shopify gets only a portion of those revenues (which it refers to as GMV, or gross merchandise value) via subscription and payment fees.That said, Amazon's North American business likely is worth $500 billion or more. It, too, has a huge reseller business. And its profit margins in North America, about 5%,aren't exactly enormous.No. 2 on the list is eBay (NASDAQ:EBAY), at 6.3%. eBay is worth $35 billion. Given that Shopify almost certainly will pass that online reseller in the next few quarters, is there at least an argument that SHOP stock should be more valuable? And maybe much more valuable? The same is true of Square (NYSE:SQ), a semi-competitor which, even after a recent plunge, is valued at roughly $25 billion excluding cash.Again, this is not to say that Shopify stock is cheap. It isn't. I wouldn't pay $370 a share for it. And if the entire market is overvalued, as many fear, these comparisons will break.But here, too, there's at least a way to see the valuation as something short of ridiculous. Right now, given the short-term enthusiasm behind Shopify stock, that too might be enough.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Marijuana Stocks to Ride High on the Farm Bill * 8 Biotech Stocks to Watch After the Q2 Earnings Season * 7 Unusual, Growth-Oriented REITs to Buy for Your Portfolio The post There Is a Fundamental Case for Shopify Stock appeared first on InvestorPlace.
Square (NYSE:SQ) launched its Square Terminal, which accepts payments and issues receipts, in Canada on Aug. 8, about ten months after launching the all-in-one device in the U.S. The company's latest Canadian move is excellent news for the owners of SQ stock. Source: Shutterstock InvestorPlace - Stock Market News, Stock Advice & Trading Tips It Meets a NeedAt the time of Square Terminal's U.S. launch, Square's head of hardware, Jess Dorogusker, said this about the terminal:"Even if you do get accepted by a traditional terminal provider to accept payments, you typically sign up for a contract that is at best opaque and probably not so fair. There's a teaser rate, there are monthly fees, there's a variety of other fees, different cards cost different amounts," Dorogusker told Fast Company in October 2018. * 10 Marijuana Stocks to Ride High on the Farm Bill "Square Terminal is our way to fix basically all of those things," Dorogusker added.With Square Terminal, small businesses receive a sleek design and complete functionality, including a built-in printer, a battery designed to last an entire day, and Wi-Fi and Ethernet compatibility. It's a dream product for merchants and service providers. Dentists are using the terminals to explain a patient's entire bill in their treatment rooms, avoiding the lack of privacy the waiting room entails. SQ launched the terminal a year ago, unsure how its customers would use it. "What's exciting to me about it is that it kind of resonates back to when we first started the company and we built the reader," SQ CEO Jack Dorsey said last October. "We had some idea of who would use it, but really no idea how it would end up being used. This has very similar properties where we'll probably be surprised at how people use it."Ten months later, it's clear that, in a positive trend for SQ stock, businesses have used it a lot because Square launched the terminal in Canada. Multiple FunctionsAt the Canadian launch of Square Terminal, Dorogusker, Square's head of hardware, told reporters that the portable terminal provides small- and medium-sized businesses with the ability to manage inventory, send invoices, record deposits, manage payment histories, and generate reports about their companies.The product eliminates the need for shopkeepers to deploy a slew of iPads, smartphones and tablets, to successfully operate their businesses. "It's so hard running a business. The last thing you want to consider is redoing your equipment or system so when something works you don't want to touch it because you need to focus on your customers," Jack Dorsey said at the August launch. "So [the terminal] it's the consideration of a new system and breaking through the noise of the day-to-day operations.For the terminal's upfront cost of C$299, a 2.65% transaction charge, and a C$0.10 per debit card charge, merchants get an easy-to-use terminal that doesn't require expensive technology or long-term contracts to operate.Offering swipe, insertion, or tap-to-pay processing, Square Terminal is a solid product that will enable SQ to compete against Shopify (NYSE:SHOP) and Moneris Solutions, Canada's largest payment processor. That's definitely positive for SQ stock. The fact that the device has moved into Canada after less than a year after its U.S. launch says all you need to know about its popularity in the U.S. The Bottom Line on SQ StockBetween Terminal, Cash App, and Square Capital, SQ is building a group of innovative products and services that look poised to continue to push Square stock higher. I've been a fan of Square's since early in 2018. It's one of the best fintech disruptors, in my opinion, public or private. In the long-term, I don't think anyone can go wrong by buying SQ stock.As a Canadian, I hope SQ continues to shake up the financial-services industry north of the 49th parallel. We could use it. At the time of this writing, Will Ashworth did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Marijuana Stocks to Ride High on the Farm Bill * 8 Biotech Stocks to Watch After the Q2 Earnings Season * 7 Unusual, Growth-Oriented REITs to Buy for Your Portfolio The post Squareas Latest Canadian Move Should Boost Square Stock appeared first on InvestorPlace.
The idea of disruptors - single companies that (usually quickly) change the landscape of an entire industry or sector - isn't new. Henry Ford and Ford Motor (F) revolutionized automaking in the early 1990s. Phil Knight's Nike (NKE) forever altered the athletic-shoe industry.In the process, these and other similar game-changers were colossally successful stock picks, shooting higher year after year as they ate the rest of their industry's share.Today, institutional investors with deep pockets still are committing large sums of capital to disruptive technologies. For instance, in Canada, Quebec's largest pension fund - Caisse de dépôt et placement du Québec - recently announced that it would invest up to $2 billion in public-company stocks and pre-initial public offering (IPO) companies with the potential to become leaders in their industries.Here in the U.S., investment managers such as Ark Investment Management LLC, are focused exclusively on disruptive innovation. Ark defines disruptive innovation "as the introduction of a technologically enabled new product or service that has the potential to change an industry landscape by creating simplicity and accessibility while driving down costs." This sounds like the kinds of innovations harnessed by Ford and Nike in their heydays.Today, we'll explore 10 stock picks that have the potential to be disruptors themselves. A few of these are established companies that are delving into new markets, while others are younger companies that are only starting to be a thorn in other companies' sides. Just be cautious. A few aren't even profitable yet, which makes them considerable risks and more suitable for aggressive allocations. SEE ALSO: The 19 Best Stocks to Buy for the Rest of 2019
Guggenheim Securities analyst Ken Wong said on Tuesday that Shopify’s vendor partners are enthusiastic over its delivery network’s prospects.
Tobi Lütke, the Shopify chief executive, prefers his employees to refrain from checking the ecommerce company’s share price too often. Shopify’s shares, which first listed on the New York Stock Exchange in May 2015, have been on a tear this year. “I had to remind everyone in [corporate messaging app] Slack that our share price is based on supply and demand, and is something that Wall St does,” said Mr Lütke, comparing the equity markets to sports betting.
The key to investing is buying good stocks. Sounds simple enough, right? If it's so simple, why isn't everyone a great investor?Because what constitutes "good stocks" to buy is widely debated across the entire financial media landscape. Are the best stocks to buy cheap stocks, with price-to-earnings multiples below the market average multiple? Are they stocks with big yields, that pay you regardless of how the stock performs? Or are the best stocks momentum growth stocks, with 50%-plus revenue growth rates and huge trailing twelve month returns?Arguably, it's all of them. What makes a good stock isn't a particular characteristic, but rather a combination of favorable characteristics which, when mixed together, create a winning recipe for long-term success.InvestorPlace - Stock Market News, Stock Advice & Trading TipsWith that in mind, here's one favorable characteristic of a "good stock" in the internet era: lots of high margin recurring revenue.Why is that a favorable characteristic? Recurring revenue means high visibility revenue since -- barring some sea change of subscription cancellations -- that revenue will come back next year. By the same logic, high margin, recurring revenue means high visibility profits, and as we all know, as go profits, so goes a stock. * 10 Best High-Growth Stocks to Buy for Young Investors Because of this, stocks with a lot of high margin recurring revenue are often set up for long-term success. That's why I've put together a list of five growth stocks to buy with a lot of high margin, recurring revenue. Stocks to Buy With High-Margin Recurring Revenue: Netflix (NFLX)Source: Shutterstock How Much of Revenue Is Recurring: Essentially 100%At What Gross Margin: Over 35%, and climbing rapidlyArguably the most well-known growth stock with a ton of high-margin recurring revenue is Netflix (NASDAQ:NFLX), the streaming service giant which collects nearly 100% of its revenue from annually recurring subscription fees, at a 35%-plus and rapidly rising gross margin.Despite that attractive business model, there are two big concerns weighing on NFLX stock right now -- competition and profitability. Both concerns are overstated.On the competition front, linear TV packages are so expensive (upwards of $100 per month) and subscription TV packages so inexpensive ($10 to $15 per month) that consumers cutting the cord can afford to bundle together multiple streaming services. Indeed, at a $10 to $15 price point, most Americans would be willing to subscribe to two to three streaming services, according to a MorningConsult survey. Thus, Netflix doesn't need to beat Disney (NYSE:DIS) or AT&T (NYSE:T). It just needs to be No. 2 or No. 3, which it unequivocally is and will remain to be given its data and reach advantages.Competition concerns are also overstated. Yes, Netflix burns a ton of cash right now, and gross margins are just 35%. But, let's zoom out and look at the business model. Netflix has relatively fixed content costs. Regardless of how many subscribers Netflix has, if it costs $10 million to make an original movie today, it will cost the same in five years, net of inflation. But, revenues rise with subscribers, so while costs are fixed relative to sub growth, revenues are not. Thus, the model is built to benefit from tremendous leverage at scale.Net net, despite recent operational concerns, Netflix is still a winning growth company with a stable, high-margin recurring revenue base, that will one day produce huge profits at scale. Those huge profits will inevitably lead to big gains for NFLX stock in the long run. Chegg (CHGG)Source: Shutterstock How Much of Revenue Is Recurring: Roughly 85%At What Gross Margin: At least 75%, probably above 80%Another consumer-facing growth stock with a ton of high-margin recurring revenue is Chegg (NASDAQ:CHGG), the digital education platform which collects about 85% of its revenue from annually recurring subscriptions to its Chegg Services ecosystem, at a gross margin that is likely north of 80%.The secular bull thesis here is simple. Most of the consumer economy has become all-digital, all the time. The academic world has not. Chegg is changing that, building a connected learning platform that gives high school and college students across America the digital education companion they've needed for the past several years.Demand is huge -- Chegg has grown subscribers at a near-40% compounded annual growth rate since 2012. That demand is paying up -- Chegg Services revenue has grown at a 45% compounded annual growth rate since 2012. All that money is of the high margin quality -- total gross margins are north of 75%, meaning the Services gross margin is likely north of 80%. And, above all else, the opportunity is huge -- 3.1 million Chegg subscribers out of 36 million high school and college students … in the U.S. alone. * 15 Growth Stocks to Buy for the Long Haul Big picture, this is a high-quality company supported by secular growth drivers. The company has a long runway for growth ahead of it, and produces tons of high margin, annually recurring revenue. That's a winning recipe for long-term success. Shopify (SHOP)Source: Shopify via FlickrHow Much of Revenue Is Recurring: Around 40%At What Gross Margin: Above 80%Although subscriptions aren't the bulk of its business model, e-commerce solutions provider Shopify (NYSE:SHOP) nonetheless collects about 40% of its revenue from subscriptions, and collects those revenues at a gross margin north of 80%.Taking a step back here, Shopify is a Canadian-based company that provides e-commerce solutions to merchants of all shapes and sizes. In so doing, they've become the equivalent of a digital store front, or the commerce backbone for hundreds of thousands of merchants all across the world. The company makes money two ways -- those e-commerce solutions are sold in subscription packages, and Shopify takes a cut of the sales processed through its merchants' stores. Merchant sales make up the majority of revenue, but the subscription business is higher margin and, therefore, equally important to profits.The bull thesis here is as follows. Shopify presently accounts for less than 1.5% of global e-retail sales. That's a very small piece of this pie. But, Shopify's share is rapidly growing, because of underlying secular trends promoting entrepreneurship and do-it-yourself mentalities among consumers globally. Those secular trends will remain in play for the foreseeable future. So long as they do remain in play, Shopify's share of the global retail sales pie will rapidly expand. As it does, Shopify's revenues will continue to march higher, and because the business operates at such high gross margins, that big revenue growth will lead to even bigger profit growth.Long term, then, Shopify projects as a big-time profit growth company. All that profit growth should push SHOP stock higher in the long run. Adobe (ADBE)Source: Shutterstock How Much of Revenue Is Recurring: Almost 90%At What Gross Margin: Over 90%Perhaps the king of the subscription model, Adobe (NASDAQ:ADBE) collected 88% of its revenue in fiscal 2018 from annually recurring subscriptions, and those annually recurring subscriptions have yielded a gross margin north of 90% for the past several years.Adobe didn't earn the title of subscription model king for no reason. We all know the Adobe name -- they are the only relevant name in the creative solutions world for photo editing, video editing, so on and so forth. But, back in 2010, Adobe didn't really know how to maximize its monopoly in the creative solutions game. Then, a light bulb went off -- pivot everything to the cloud, make everything a subscription and collect high-margin, annually recurring revenue from now until forever.In 2012, they did just that. Consumers were upset at first. Their favorite creative solutions program went from being available forever for a one-time-fee, to being locked behind a subscription paywall. But, because Adobe has no competition in this space, those complaints eventually drowned out. Within a few years, everyone and their best friend had pivoted to the subscription model. Further, Adobe expanded its reach because -- perhaps by luck -- the world simultaneously became more visually obsessed, so more and more consumers and enterprises had a need for Adobe's creative solutions.These trends will remain in play for the foreseeable future. Adobe's revenues will continue to rise as the world becomes more and more visually-obsessed, meaning more consumers will tap Adobe to edit and amplify their photos. At the same time, more enterprises will tap Adobe to create visually pleasing marketing and product/service experiences that relate to their visually-obsessed consumers. All that revenue will come in at high gross margins, so profits will simultaneously rise by leaps and bounds. * 7 Great Small-Cap Stocks to Buy Net net, then, Adobe's profits will continue to roar higher over the next several years. That will power equally robust gains in ADBE stock long term. Okta (OKTA)Source: Shutterstock How Much of Revenue Is Recurring: Over 90%At What Gross Margin: Over 80%On the enterprise side of things, identity cloud pioneer Okta (NASDAQ:OKTA) generates over 90% of its annual revenues from subscriptions it sells to cloud security customers. Those subscription revenues generated gross margins north of 80% in fiscal 2018.Let's zoom out here. Okta has created something called the Identity Cloud. The idea behind the Identity Cloud is pretty revolutionary and genius. Essentially, instead of building a "castle" around a company's workflows and processes, Okta has outfitted each individual in a company's workflows and processes with "armor". That is, Okta focuses on protecting the individual, not the whole. But, if everyone in the ecosystem has "armor", then the whole ecosystem is safe. It also means that there is no "weak link". Because everyone is wearing this "armor", individuals can securely do almost anything without compromising the integrity or safety of the ecosystem.Enterprises have found this identity-based approach to cloud security compelling. At its core, it allows individuals to securely access any technology at any point. This seamless adoption curve is critical in a world where new technologies are being rapidly adopted and deployed every day.As such, Okta's growth trajectory has been very impressive. We are talking "50%-plus revenue growth" impressive. Over 90% of that revenue comes from annually recurring subscriptions. That subscription-based revenue has 80%-plus gross margins.In other words, this is a big growth business with high visibility and robust margins. Ultimately, that's a long-term winning recipe.As of this writing, Luke Lango was long NFLX, DIS, T, CHGG, SHOP, ADBE and OKTA. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Cheap Dividend Stocks to Load Up On * The 10 Biggest Losers from Q2 Earnings * 5 Dependable Dividend Stocks to Buy The post 5 Stocks to Buy With High-Margin Recurring Revenue appeared first on InvestorPlace.
I don't think there's any doubt that Shopify (NYSE:SHOP) is one of Canada's best tech stocks. Up 163% in 2019, SHOP stock is having a bang-up year in the markets. Source: Shutterstock InvestorPlace - Stock Market News, Stock Advice & Trading TipsHowever, considering that Shopify stock is trading at 375 times its forward earnings and 31.5 times its sales, I don't think there's any doubt that its valuation is approaching nosebleed territory. Another InvestorPlace columnist, Josh Enomoto, recently suggested that the owners of SHOP stock might want to trim their stakes. "The finer print from the last earnings report isn't as impressive as many analysts have claimed. For instance, folks are going crazy over the fact that year-over-year sales growth is nearly 48%. But in Q2 2018, the YOY growth rate was a much more robust 61.5%," Josh wrote in a column published on Aug. 7. * 7 Great Small-Cap Stocks to Buy At the end of the day, he believes that SHOP's gains over the past two years, both in terms of its stock price and its revenue growth, have been the easy part. The hard part is continuing to grow at a double-digit-percentage pace when Amazon (NASDAQ:AMZN) and Facebook (NASDAQ:FB) are watching intently, figuring out how they can jump-start their growth by emulating what Shopify's done.Josh still believes that SHOP stock is worth owning. But he and I think that the valuation of SHOP stock is a little rich, making Shopify stock likely to correct in the coming months. In the meantime, Shopify's not the only Canadian tech star worth considering. Here are three other Canadian tech names investors ought to consider putting on their watchlist of potential stock buys. Ceridian HCMAlthough the headquarters of the human capital management software company is technically in Minneapolis, Ceridian HCM (NYSE:CDAY) CEO David Ossip runs the company out of Toronto. In May 2018, I recommended that investors buy Ceridian stock. I contended that its Dayforce cloud-based software that allows companies to combine HR, payroll, benefits, workforce management and talent management in a single application,was a formula for success. Back then, Ceridian had a little more than 3,000 customers who paid a per-employee, per month (PEPM) subscription over a term of between three and five years. If a customer's headcount grows, Dayforce generates additional revenue. So successful has Dayforce been -- its compound annual growth rate over the past five years is 60% -- that I called it one of the best up-and-coming stocks on the NYSE. Since my column was published, CDAY stock is up 65%, and more gains are on the way. In Ceridian's Q2 2019 report, the company said that Dayforce's recurring revenue had jumped 31.3% year-over-year in Q2 to $102.4 million. More importantly, Dayforce's customer base jumped,33% YoY, exceeding 4,000. Business is booming. Constellation SoftwareConstellation Software (OTCMKTS:CNSWF) is a mercurial, publicity-shy software company run by billionaire Mark Leonard.The company builds its business through acquisitions. In fiscal 2018, it made $630.7 million of acquisitions, and none was considered to be significant on its own. That means CBSWF does a lot of due diligence and legal work on smaller deals that most larger software companies wouldn't bother with. In fiscal 2018, its top line rose 23% YoY to $3.1 billion and its bottom line jumped 71% YoY to $379.3 million. Most of its sales growth came from acquisitions, as its revenues excluding acquisitions increased 2% YoY. Constellation's share price rises because it makes acquisitions at a fair price and adds value to the companies it acquires by growing their revenues over time. Constellation is considered one of the most disciplined allocators of capital in North America. Lightspeed POSLightspeed POS (OTCMKTS:LGHEF) is a Montreal-based provider of payment processing systems for small and medium-sized businesses. Founded in 2005, Lightspeed went public in March of this year. Lightspeed's IPO was one of the top ten tech IPOs in the history of the Toronto Stock Exchange. Its share are also now listed on the American pink sheets. "A couple of years ago, people would have said, you're not going to get American-level valuations, or interest, or volume on the Toronto Stock Exchange, and hopefully we'll show that that's just not true," Lightspeed CEO and founder Dax Dasilva said at the time of its IPO. "We've been able to attract as many American investors as Canadian investors by going public, and also by going public in Canada."The company expects fiscal 2020 revenue of at least $112 million with a positive cash flow of $9.5-$11 million. It has almost $200 million in cash and no debt at the moment. The company's cloud-based point-of-sale solutions are currently used in over 100 countries and 49,000 locations around the world. Its target market of retailers and restaurants is approximately 47 million. It's an up-and-comer. The Bottom Line on SHOP StockIs SHOP stock Canada's best tech name?While there's no doubt it is Canada's biggest tech stock by market cap, it's probably the most expensive in terms of its valuation.Would I own SHOP stock? You bet.However, I wouldn't discount these other three Canadian tech stars.At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Cheap Dividend Stocks to Load Up On * The 10 Biggest Losers from Q2 Earnings * 5 Dependable Dividend Stocks to Buy The post Is Shopify Stock Canadaas Best Tech Star? appeared first on InvestorPlace.
In this daily bar chart of SHOP, below, we can see that prices have tripled since late December - from $120 to $360. Amazing! SHOP has been above the rising 50-day moving average line the entire time and dips towards the average line have been buying opportunities. You could say SHOP was extended versus the 200-day average.
At the end of July, a short seller went after Hexo Corp. (NYSE:HEXO) -- and the market yawned. In fact, the HEXO stock price bottomed the Friday before, gained 9% the day of the report, and even with a pullback is up over 11% since the session before its release.Source: Shutterstock The market's lack of response isn't terribly surprising. Short sellers have had a few high-profile misses of late. In late 2017, Citron Research infamously compared Shopify (NYSE:SHOP) to Herbalife (NYSE:HLF); SHOP stock has tripled since then. * 10 Stocks Under $5 to Buy for Fall Closer to home, in December Quintessential Capital Management alleged self-dealing at fellow cannabis producer Aphria (NYSE:APHA). Quintessential made some good points: Aphria took a C$50 million impairment on acquired assets barely four months later. APHA stock lost half its value after the release, then promptly rose 150% before fading along with other cannabis plays.InvestorPlace - Stock Market News, Stock Advice & Trading TipsSo there are some reasons why investors might see this bear raid, too, as much ado about nothing. And in terms of the most widely-covered allegation, it may be. But the report does highlight some potential risks to HEXO stock -- risks that investors would be wise to at least keep in mind going forward. The Snapchat Risk to Hexo StockThe primary allegation from short seller The Friendly Bear is that Hexo's advertising on Snap (NYSE:SNAP) platform Snapchat could violate Health Canada regulations. The Friendly Bear compared Hexo to CannTrust Holdings (NYSE:CTST), whose stock plunged after illegal grow rooms put its production license at risk.The argument is intriguing, if a little thin. Health Canada regulations prohibit advertising of any kind to minors (those under 18, the federal minimum age for cannabis purchase in the country, though most provinces set the age at 19). Snapchat, of course, sees heavy usage among teenagers.But, as The Friendly Bear points out, the regulator also forbids advertising that associates the brand with "glamour, recreation, excitement, vitality, risk or daring." An ad captioned "A Fresh Spark" may well fit that bill. Both issues are amplified by the fact that Health Canada, in March, emphasized both the promotional nature of some online advertising and pointed to concerns about social media ads being seen by customers who were not of age.In a statement to Bloomberg, Hexo refuted the report. It noted that it doesn't run campaigns in its home province of Quebec, where regulations are more stringent. And it said its agreement with Snapchat ensures ads reach only adults.That response seems to have satisfied investors. And perhaps with good reason. The regulations are stringent, and perhaps somewhat vague. Even if Health Canada determined that the ads were in violation, one imagines Hexo would be able to pull or revise its advertising. Comparing Hexo to CannTrust, in particular, seems like a potential bridge too far. Two More Risks to the HEXO Stock PriceThat said, the report also contained two other intriguing facts that didn't seem to gain as much attention. First, the author highlighted a potential risk to Hexo's relative dominance in Quebec. The company owns about 30% share in that key market, thanks to a first mover advantage and its physical presence in the province.An agreement with the province ensures guaranteed purchases of 20,000 kilograms in year one, per a Hexo press release from last year. But it's not clear that the guaranteed extends beyond year one, with Hexo itself writing at the time that the agreement was "expected to supply" increased amounts going forward. With competition increasing, the expected growth in demand may not materialize.The second source of potential pressure comes from a recent regulatory measure. Quebec already has banned the sale of candies, in an effort to protect minors. Federal regulations on edibles appear to be much the same, ahead of the expected launch of those products near the end of this year.That's a potential issue for Hexo in Quebec and beyond. After all, Hexo itself is focused on becoming, as it terms it, "the premier branded 'ingredients for food' cannabis company." If regulations compress the edible market, Hexo, more than other cannabis plays, would suffer. Patience May Be Wise With HEXO StockNone of this is to say that investors should have sent the HEXO stock price tumbling -- or that Hexo stock is a short. I wrote last month that HEXO would be an intriguing buy at some point. The stock has returned to similar levels, but I'm still somewhat loath to rush in.The focus on edibles is wise for a smaller producer -- but that catalyst remains likely six months away. Cannabis stocks continue to struggle, with even Aphria's blowout earnings report not enough to spark a sector-wide rally.And Hexo Corp. doesn't have a lot of room for error. It remains reliant on Quebec. It will remain reliant on edibles going forward. If either of those two markets is smaller than hoped, Hexo's growth slows. And a market cap still over $1 billion (including the effect of warrants) may well come down. The HEXO stock price may be cheaper, but that's not the same as it being cheap.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Cheap Dividend Stocks to Load Up On * The 10 Biggest Losers from Q2 Earnings * 5 Dependable Dividend Stocks to Buy The post Social Ads Not the Only Risk to HEXO Stock appeared first on InvestorPlace.
Amazon's (NASDAQ:AMZN) valuation used to be a pretty big talking point. "It doesn't make any money!" "The P/E multiple is in the thousands!" How many times did we hear about that? Too much. Making matters worse for the bears, Amazon has gone on to become one of the largest companies in the world.It's forced many of those investors to finally acknowledge that AMZN stock is instead a buy, although there are different opinions on when to do it.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Dip-Buying on Amazon StockMany years ago, I was skeptical of AMZN stock because of these valuation concerns. In hindsight it's easy to laugh about it. But at the time, it was defying all historic valuation metrics.Those fears kept me from buying aggressively, which was a mistake looking back on it. However, its momentum and strong price action kept me from ever shorting the e-commerce giant. Further, it's one of my favorite deep-dip stocks to buy on big corrections. * 10 Cheap Dividend Stocks to Load Up On When we see huge stock market corrections, we tend to get larger-than-average pullbacks in AMZN too. Click to EnlargeIn early 2014 and 2016, AMZN stock took a roughly 30% fall. In the fourth quarter of 2018, shares fell almost 40% from peak to trough. Not many investors will snag the bottom but being cognizant of these types of corrections is important.More mild corrections (15%-plus losses) happen in between the big ones. So, while it may be tempting to buy a few AMZN shares when the stock is rallying and analysts are slapping $2,500 price targets on it, bigger dips are investors' real friend.Right now, Amazon stock is 14% off the recent highs. It's also into a key level of support, as you'll see below in a moment. Should it correct back down to $1,400, a major support level in 2018, it will be 31% off its highs.The bottom line? When the stock market is in irrational sell-off mode, keep Amazon stock on watch. Down 30% or more doesn't come around often, but it's a good time to nibble when it does. Trading AMZN StockAt $1,770, Amazon stock has a number of support levels just below current prices. The prior Q4 highs and the recent lows from earlier this month are nearby. There's also the 38.2% retracement and the 200-day moving average. Finally, there's uptrend support for 2019 (blue line). Click to EnlargeIf all of these levels give way, the 50% retracement near $1,675 is in play, with the 61.8% retracement near $1,600 below that. In between -- at $1,628 -- AMZN will be 20% off its recent high. At $1,424, the Amazon stock price will be 30% off the recent high and just above key support. Bottom Line on AmazonAmazon now commands an $875 billion market capitalization, although at one point it was north of $1 billion.Just look at the continued onslaught we're seeing in traditional retail. Department stores like Macy's (NYSE:M) are getting crushed, while J.C. Penney (NYSE:JCP) is on the brink. There are some that are not only surviving but thriving, such as Home Depot (NYSE:HD) and Costco (NASDAQ:COST). But for the most part, it's quite clear e-commerce is the present and the future.That bodes well for names like Amazon and Shopify (NASDAQ:SHOP). But Amazon's business goes much further than that.It's got one of the largest cloud businesses in the country, outmuscling names like Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL). Its digital advertising space has quickly grown into a behemoth in its own right.Put simply, AMZN is a tech giant with a sprawling reach across the digital world. It may not be cheap -- although it's cheaper than its historical comparisons -- but it's one of those names you buy on deep pullbacks. They may only come around once in a while, but those are the times to pounce.Amazon is forecast to grow revenue about 20% this year to roughly $280 billion and almost 19% in the following year. Now profitable, AMZN stock features strong earnings and robust cash flow. It's a name to own if you get it on a deep enough correction.Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long GOOGL and AMZN. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Cheap Dividend Stocks to Load Up On * The 10 Biggest Losers from Q2 Earnings * 5 Dependable Dividend Stocks to Buy The post Do You Buy Amazon Stock Here or on a Deeper Dip? appeared first on InvestorPlace.
Two years ago, Chris Wane, a now 31-year-old living in Manchester, England, was struggling to pay his bills and often couldn’t afford enough food for the week. Wane started an e-commerce business and used drop shipping — a practice in which a retailer keeps no inventory and a third-party supplier sends consumers the products — to handle orders. “I heard about drop-shipping a couple of years ago, and I wanted to try it,” Wane said.
(Bloomberg) -- Shopify Inc.’s scorching rally and Lightspeed POS Inc.’s successful trading debut this year are throwing the spotlight on who might be the next Canadian tech star to go public.A total of C$1 billion ($751 million) was invested in 142 venture capital deals in the first quarter, up 48% from a year earlier, according to the Canadian Venture & Private Equity Association. More than half of that was in tech and increasingly from U.S. investors.Here’s what the founders of some of Canada’s hottest tech firms are saying about the future of their companies, and the potential for initial public offerings:ClearbancClearbanc offers $10,000 to $10 million to startups to help fund their marketing campaigns on Facebook, Google and the like in return for a flat fee and a share of revenue.The Toronto-based investment firm, founded in 2015, raised $300 million in new funding led by Highland Capital Partners of the U.S., the largest disclosed VC-financing this year in Canada. That brings total funding to $420 million.Clearbanc plans to offer $1 billion in financing this year and is interested in funding parts of a business that could turn into a repeatable revenue stream--infrastructure, shipping and sales commissions.It’s expanding outside the U.S. and Canada, where there’s a less developed venture ecosystem and “banks are more conservative,” according to co-founder and chief executive officer, Andrew D’Souza.“We think that the fundamentals of the business, the market opportunity, justifies a large standalone business,” D’Souza said about the possibility of an IPO.WattpadWattpad Corp. may no longer be a startup but its ambitions just keep growing. Founded as a mobile-reading app, 12-year-old Wattpad now calls itself a “multi-platform entertainment company.”The Toronto-based company has provided content for one of the most re-watched movies on Netflix (“The Kissing Booth”), a Hulu series (“Light as a Feather”), and this year a Hollywood feature film (“After”), all through Wattpad Studios, launched in 2016.Last week it inked a deal with Penguin Random House in the U.K. to turn its online content, mainly created and read by young women, into books. That follows the launch of its own publishing imprint, Wattpad Books, in the U.S. in April.The company uses data from more than 80 million monthly active users to identify the best stories across its platform and turn them into content. It has launched a paid, ad-free version as well as exclusive content for a fee.Wattpad has raised $117.8 million from investors including OMERS Ventures, Tencent Holdings Ltd.’s capital arm, and August Capital Corp, and is generating revenue in “eight figures,” according to co-founder and chief executive, Allen Lau.As for an IPO, it’s “not what we spend time focusing on,” Lau said. “Our focus right now is on movies and TV shows, with our partners.”VidyardVidyard Inc. wants to be the YouTube of business videos. Its software allows companies to create personalized videos to engage with customers and use data from their viewing habits to analyze that engagement.Companies are expected to spend $103 billion annually in video-ad marketing by 2023, according to Forrester Research.Vidyard counts 1,200 businesses in over 170 countries as its customers, including enterprise customers such as Honeywell International Inc., LinkedIn and Citibank.“In terms of the next two to three years, we’re just focused on consistent, hockey-stick style growth,” says Devon Galloway, co-founder and chief technology officer at Kitchener, Ontario-based Vidyard.The company has raised $60 million to date from investors including OMERS Ventures, Inovia Capital and the venture capital arm of Salesforce Inc.Galloway said if Vidyard continues to grow as well as it has an IPO would certainly be on its path.WealthsimpleWealthsimple Inc., wishes to replace banks as a customer’s primary financial relationship, according to founder and CEO Michael Katchen.“We want to be a firm that demystifies money,” Katchen said in an interview in Bloomberg’s Toronto office. The investment-services company has more than C$5 billion in assets under management and 175,000 customers in Canada, the U.S. and U.K.The robo-adviser favored by millennials, is also targeting wealthier Canadians and has branched out into commission-free stock trading and savings products. Mortgages, life insurance and checking accounts could be next, Katchen said.Founded in 2014, WealthSimple is not yet profitable, but its backers are patient, Katchen said. These include Power Financial Corp., an investment arm run by the Desmarais family and Allianz SE.Katchen said he’s interested in an IPO but it’s still “a few years away.”(Updates with Clearbanc’s financing plan)To contact the reporter on this story: Simran Jagdev in Toronto at email@example.comTo contact the editors responsible for this story: Jacqueline Thorpe at firstname.lastname@example.org;David Scanlan at email@example.comFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Shopify's CEO net worth has reportedly doubled to $3.2 billion in just six months, according to Forbes. Yahoo Finance's Dan Howley joins Akiko Fujita on 'The Ticker' to discuss.