For millions of small businesses struggling to stay afloat during the pandemic, setting up shop online has been a must for survival.
While researchers scramble to create a vaccine and other treatments for COVID-19, more people are turning to online shopping for their necessities.
As a result, some internet companies are booming.
Case in point: Amazon (AMZN) helped deliver goods purchased through internet orders to everyone at home and has seen its stock soar over 95% since bottoming on March 12. Zoom Video Communications (ZM) has helped businesses communicate and hold work meetings online, and shares have soared about 150% since March 23.
When it comes to e-commerce sales, which climbed 37% to $200 billion in the second quarter, Shopify, Inc. (SHOP) has been a crucial lifeline for small businesses — and one of the market’s big winners.
The company’s software allows merchants to pick and choose a website design, and then set up an online storefront and mobile application in a “hassle-free” manner. Shopify processes payments and calculates shipping rates. It provides fulfillment services that merchants can use to store and ship their goods. The company also offers financing to companies in other countries and plans on soon launching its business account services for merchants called Shopify Balance.
Since the March low, Shopify stock has climbed over 150%. Its market cap of $115 billion is higher than 13 major retailers combined, including eBay (EBAY), Best Buy (BBY), Gap (GPS), Dick’s Sporting Goods (DKS), Macy’s (M), Foot Locker (FL) and Nordstrom (JWN), according to the Wall Street Journal.
Interestingly, Shopify had humble beginnings, as operations kicked off nearly 15 years ago with only five employees who worked from a local coffee shop. Based in Canada, Shopify started as an online store for snowboard equipment. However, the established e-commerce platforms 10 years ago didn’t meet the company’s needs, so it developed its own solution.
Fast forward 10 years and the company now employs more than 5,000 people who help small businesses reach consumers online. About 1.3 million businesses in 175 countries around the globe utilize Shopify’s e-commerce platform.
What types of businesses use Shopify’s platform? Name a type of a business and it’s likely using Shopify’s solutions. Businesses range from web designers to app developers, from bicycle shops to clothing retailers. So, it’s no surprise that business is booming right now.
During the second quarter, Shopify added 71% more stores from the prior quarter on its platform. The growth was spurred on by the company’s free trial extension to 90 days, as well as the shift to make more purchases online during the pandemic.
Total second-quarter revenue surged 97% from last year to $714.3 million. Subscription solutions revenue accounted for $196.4 million, or a 28% year-over-year increase, and merchant solutions revenue accounted for $517.9 million, or 148% year-over-year growth.
Even more impressive: Second-quarter earnings walloped estimates by 10,400%!
Adjusted second-quarter earnings soared 950% year-over-year to $129.4 million, or $1.05 per share, up from $10.7 million, or $0.10 per share, in the second quarter of 2019. The analyst community was only looking for adjusted earnings per share of $0.01.
So, it’s also no wonder that 23 analysts increased their third-quarter earnings forecasts for the company in the past quarter. Third-quarter earnings are expected to come in at $0.47 per share, compared to a $0.29 per share loss in the same quarter a year ago. Third-quarter revenue is expected to grow 64.3% year-over-year to $641.6 million.
Given the strong growth, the stock is currently rated a “Strong Buy” in my Portfolio Grader, with an A-rating for its Quantitative Grade, B-rating for its Fundamental Grade and A-rating for its Total Grade. (It’s also why I added the stock to my Accelerated Profits Buy List back in August.)
Money is also flowing into plenty of my other high-quality stocks that are soaring in the pandemic thanks to the essential goods and services they continue to provide to customers.
So, I expect my stocks to benefit from quarter-end window dressing and the ETF realignment in the second half of September. That’s when large portfolio managers make their portfolios “pretty” by shoring up on fundamentally superior stocks.
Where to Find the Superior Stocks
If you’re not sure which stocks to invest in before the quarter-end window dressing and ETF realignment kicks off, then I recommend you take a spin through my exclusive Platinum Growth Club Model Portfolio. My subscribers have been enjoying gains of 214%, 250% and 252% – just to name a few.
Now, to prepare for the strength in the coming weeks, I’ve been busy adding new recommendations, too. In the past month, I’ve recommended six new buys in Growth Investor, four in Breakthrough Stocks, 11 in Accelerated Profits (including two new stocks on Wednesday) and five in Platinum Growth Club.
And that’s just the beginning.
New fundamentally superior opportunities are popping up on my radar as I write this, and I expect to add new companies to my Buy Lists so my subscribers are “locked and loaded” for the third-quarter earnings season, which, by the way, should be stunning.
As a Platinum Growth Club subscriber, you have access to every single stock – I have over 100 stocks across all my services! If you’re interested, you can sign up here. And you couldn’t pick a more perfect time to join. I will be hosting my exclusive September Live Chat Event next Monday – for my Platinum Growth Club subscribers only.
This is an incredibly valuable event that you don’t want to miss. I will be discussing a wide range of topics, including my current market outlook, the recent tech stock rotation, catalysts to propel my Platinum Growth Club Model Portfolio stocks higher and the third-quarter earnings season. I will also take time at the end to answer subscriber questions.
So if you sign up today, you can send me your questions and I’ll address them live during the event. I will also be hosting a special Q&A for my Elite Platinum Growth Club subscribers next Thursday, so I encourage you to join now so you can send me your questions early! I look forward to hearing from you.
Note: The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owned the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
Amazon (AMZN), Dick’s Sporting Goods (DKS), Shopify, Inc. (SHOP), Zoom Video Communications (ZM)