Investing Update: Why I'm Buying Shopify
What I'm buying, selling & watching
The end of a quarter will usually bring added volatility as many large funds and institutional investors move money around to rebalance their portfolios. Volatility is what we saw this week. Many stocks have fallen into correction territory which means a good time to start buying names you’ve been waiting for a pullback.
October has produced three of the worst stock market selloffs in history.
Black Monday- October 1987
The Great Crash of 1929- October 1929
Financial Crisis- October 2008
With October arriving, many have signaled this pullback as an indication of some more selling will come. We’ve heard this for many years now. This bull market has just continued to grind higher. Block out the noise and focus on the long term. Continue buying great companies and stay long the overall market. As you can see below, that’s what I’m doing to existing positions and I’ve even started a new position.
Moves I’ve Made
Here is what I said in my last Investing Update on September 16th.
“With the market still setting new highs seemingly daily, I have mostly been a spectator. Outside of keeping a close eye on Shopify (SHOP) like I mentioned in my last investing update. I have nothing else in my crosshairs as of today.”
How quickly the market can change. This weeks pullback allowed me to start a position in Shopify (SHOP) at a price I’ve been waiting for. It’s a stock I’ve had my eye on for many months.
There are two stocks that I feel are positioned to capitalize and become the online leaders in small business transactions and e-commerce. That’s Shopify and Square. They provide the tools and help to allow small businesses to easier manage their businesses through website setup, e-commerce and payment processing. I’m very long small businesses. This is the way I want to invest in it.
The other piece of news that stuck out to me recently is that last quarter Shopify surpasses Amazon in online traffic. That’s an impressive feat and illustrates their strong partnerships with merchants online.
Few companies have the growth rate of Shopify. With revenue growth in 2020 of 86% and an estimate revenue growth of 56% this year, if you’re investing for growth it’s hard not to own this.
I’ve also added to my existing positions in Square (SQ) and DraftKings (DKNG). These two stocks have fallen to levels that I consider to be a great prices and have price points where I would add to my positions. If they continue to go lower along with the rest of the Nasdaq due to the 10-Year Treasury bond rate increasing, I will just continue to buy more.
What I’m Watching
Zoom (ZM)- The stock that skyrocketed during the pandemic has been hammered the past couple months. It’s been flirting with its 52 week low. What price does this stock deserve moving forward as COVID worries subside? It’s still going to be very relevant with the increase in remote work. A number of in-person meetings will forever be replaced by Zoom. What percentage will that be and what rate can they continue to grow will determine where this stock goes from here?
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Disclaimer: This is not investment advice. You should not treat any opinion expressed as a specific inducement to make a particular purchase, investment or follow a particular strategy, but only as an expression of an opinion.