Shopify’s stock could hit $1,000, this fund manager says

It’s hard to argue with success and that goes double for Shopify (Shopify Stock Quote, Chart, News TSX:SHOP).

The stock has lit up this year, outperforming practically every name out there. And while the ‘what goes up, must come down’ theory would seem to apply in this case, investors willing to take the plunge even this late in the game, says technical analyst Jeff Parent of CastleMoore Investment, who says there could be a lot more upside to come.

Shopify’s share price continues to climb this week, hitting an all-time high on Wednesday and looking ready to break through the $500 mark at any moment. After trading sideways for the back half of 2018, the stock took off in the new year, now registering an improbable 163-per-cent gain year-to-date.

The Canadian e-commerce company did well in its last quarterly report delivered at the start of August, beating analysts’ expectations on sales and providing encouraging guidance for the remainder of the year. Revenue was up 48 per cent for its second quarter to US$362 million, where analysts had predicted US$350.5 million, with management calling for full-year sales in the range of US$1.51 billion to US$1.53 billion. Adjusted EPS was also a beat, coming in at US$0.14 per share compared to the expected US$0.03 per share.

“Our strong performance in the second quarter reflects the success of our ongoing activities and investments to help merchants start selling, sell more, and sell globally,” said Chief Financial Officer Amy Shapero in the company’s quarterly release. “The appeal of entrepreneurship is universal, which is why more entrepreneurs everywhere are attracted to Shopify.”

Shopify’s stock outpaces the experts: “I wouldn’t be afraid to buy it now. It’s a little nerve-wracking,” he says. “The analysts can’t keep up. It’s the case for any stock that has moved up a lot. They’re always behind.”

Parent says that Shopify’s gains have kept it ahead of analysts’ predictions, with the stock consistently smashing through target prices.

“It has gone through some weird consolidating but very wildly-ranging prices. It broke out at around $190 at the beginning of the year and has more than doubled. It happens to be the best-performing stock on a percentage-gainer, on risk-adjusted — any metric you look at,” says Parent, vice president and chief investment officer at CastleMoore, to BNN Bloomberg on Monday.

“I own Shopify, it’s my biggest holding. I’ve made more money on this than any other stock,” he says. “My clients are making 200 per cent-plus in some cases.”

“I wouldn’t be afraid to buy it now. It’s a little nerve-wracking,” he says. “The analysts can’t keep up. It’s the case for any stock that has moved up a lot. They’re always behind.”

Shopify, which earlier this year became bigger than Ebay in terms of market capitalization, launched a new chat feature last week. Shopify Chat now allows customers to communicate on the same platform with merchants, a feature enabled through the company’s mobile app, Shopify Ping.

“We’re continuing our investment in making the conversational commerce experience as intuitive and easy as chatting with friends and families,” said Michael Perry, Shopify’s director of product.

Parent says that even with its appreciation, the stock could still go much higher.

“Back in June it lost nine per cent — very scary stuff. It stayed above that 50-day moving average, which is one of the things that I’m looking at right now,” says Parent. “If I had to guess, I’d say about $1000, just because I want it to go.”