Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Forget Dogecoin or AMC and Buy a Growth Stock Like Shopify Instead

Published 2021-06-19, 11:30 a/m
Updated 2021-06-19, 11:45 a/m
Forget Dogecoin or AMC and Buy a Growth Stock Like Shopify Instead

Forget Dogecoin or AMC and Buy a Growth Stock Like Shopify Instead

The last few months have seen cryptocurrency and meme stock investors make money hand over fist. For example, the price of each Dogecoin has risen by an astonishing 15,400% in the last 12 months. These gains are despite a 60% decline in the prices of the cryptocurrency since April 2021. So, a $500 investment in Dogecoin one year back would be worth close to $80,000 today. Similarly, shares of AMC Entertainment (NYSE:AMC) have gained a staggering 2,680% year to date.

However, these investments are high-risk ones and can easily burn your capital in just a few trading sessions. For instance, cryptocurrencies have lost over 90% in market value in previous bear markets.

Further, crypto enthusiasts have warned that the supply of Dogecoin is unlimited, and its poor economics make it a very risky bet. Most cryptos, including Bitcoin, are limited in circulation. But there are already 130 billion Dogecoins available to trade. Only 99 wallets control 67% of the total number of Dogecoins, making it vulnerable to manipulation.

Dogecoin is a meme-based cryptocurrency and has gained in value primarily due to a series of tweets by Elon Musk, making it nothing more than a hype-driven digital asset.

AMC Entertainment, on the other hand, has gained momentum due to a short squeeze initiated by a group of retail traders on social media platform Reddit. However, AMC’s sales have been decimated amid the pandemic impacting its finances considerably. Though economies are expected to reopen in the second half of 2021, AMC will be negatively impacted by the secular shift towards online streaming that has gained pace in the past 15 months.

Shopify stock is up 5,000% since IPO In case you want to generate market-beating returns, it makes sense to identify quality companies that are part of rapidly expanding addressable markets instead of looking at short-term gains in high-risk assets. One top-notch growth stock is Canada’s e-commerce giant Shopify (TSX:SHOP)(NYSE:SHOP).

Shopify stock went public six years back and has since generated over 5,000% in cumulative returns. In the first quarter of 2021, Shopify sales were up 110% year over year, while its gross merchandise volume jumped 114% compared to the year-ago period.

The COVID-19 pandemic accelerated the transition towards e-commerce shopping, and this momentum has continued in 2021 as well. In 2011, e-commerce accounted for 4% of total retail sales in the U.S., and this figure stood at close to 14% in 2020.

Around 1.7 million merchants have set up a virtual presence on the Shopify platform, allowing the company to derive a recurring stream of sales via its subscription product. Further, Shopify has expanded its suite of services over the years to provide logistics, financial, and payment support as well.

While sales more than doubled in Q1, its operating expenses were up by just 33%, indicating the tech giant enjoys massive operating leverage. Its operating profits in the March quarter stood at $119 million accounting for 12% of total sales. It also ended Q1 with a free cash flow of $130 million, while its cash and debt balance stood at $7.8 billion and $910 million respectively, making it a top bet for long-term growth investors.

The post Forget Dogecoin or AMC and Buy a Growth Stock Like Shopify Instead appeared first on The Motley Fool Canada.

The Motley Fool owns shares of and recommends Shopify. The Motley Fool recommends the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify. Fool contributor Aditya Raghunath has no position in any of the stocks mentioned.

This Article Was First Published on The Motley Fool

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.