Yahoo Sports This Growth Stock Has Market-Beating Potential
Written by Jed Lloren at The Motley Fool Canada
When looking for stocks that could beat the market, it’s essential that you turn to growth stocks. Although there are some dividend stocks that could do the same thing, the magnitude that growth stocks tend to beat the market with is much greater. There are so many outstanding growth stocks that are available to Canadians. That could make it a bit overwhelming for newer investors to decide on a stock to add to their portfolio.
In this article, I’ll discuss my top growth stock with market-beating potential.
Which stock do I think could beat the market?
If I could only choose one Canadian growth stock to beat the market over the next decade, it would be Shopify (TSX:SHOP). For those that aren’t familiar, this company provides a platform and many of the tools necessary for merchants to operate online stores. Shopify is an interesting company within the e-commerce space, because it doesn’t sell merchandise directly. Instead, it allows merchants to operate on its platform, and Shopify will take a portion of those sales as revenue.
The most intriguing aspect of Shopify may be the inclusivity of its platform. The company operates such a wide range of solutions that cater to everyone from the first-time entrepreneur to large-cap enterprises. Shopify also offers many intermediate solutions which incentivize merchants to move to larger, more comprehensive, and more expensive solutions over time.
It’s estimated that the global e-commerce industry could grow at a rate of about 9% through to 2026. That would represent a total size of $7.5 trillion. Shopify already claims a significant portion of the world’s e-commerce sales. In the United States alone, Shopify holds a 10% market share. If the company could continue to grow its market share or even maintain the share it has now, then investors could see this company grow tremendously over the next few years.
Tracking Shopify stock’s performance
Shopify stock made major headlines in 2022, when it lost more than 80% of its value. Fortunately for investors, the stock has made a move for the better. Since hitting its lowest point last October, Shopify stock has gained more than 100%. Over the past year, Shopify stock is up nearly 60%.
As the global economy continues to improve, sentiments toward Canada’s formerly largest company should as well. I predict that Shopify’s outstanding business performance will carry the stock to greater heights over time. In its most recent earnings presentation, Shopify reported a 31% year-over-year increase in its third-quarter revenue. In addition, the company’s monthly recurring revenue continues to grow and has now been recorded to have a 32% compound annual growth rate over the past five years.
Foolish takeaway
The global e-commerce industry is expected to grow at a steady pace over the coming years. Shopify is already one of the world’s biggest players in that space and continues to grow its business at an impressive rate. If Shopify can take advantage of this emerging industry, I believe investors could be in for a great time over the coming years.
The post This Growth Stock Has Market-Beating Potential appeared first on The Motley Fool Canada.
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Fool contributor Jed Lloren has positions in Shopify. The Motley Fool has positions in and recommends Shopify. The Motley Fool has a disclosure policy.
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