SHOP:CC - Better Buy: Air Canada Stock vs. Shopify
2024-01-30 16:50:00 ET
Air Canada ( TSX:AC ) and Shopify ( TSX:SHOP ) really stand out as battered bargains with a lot of runway if they’re to see their now seemingly distant all-time highs again in the near future. Indeed, Air Canada has flown into turbulence since the 2020 stock market crash, while Shopify fell off a cliff in late 2021 and the first half of 2022.
Shopify stock: How much hotter can the e-commerce kingpin get?
As for Shopify, it’s been a darling of late, surging around 71% in the past year alone. Despite the run off its lows, shares are nowhere close to their 2021 peak levels. At $108 and change, the stock needs to essentially double to see new highs again.
Though unlikely in 2024, I do think SHOP stock is more than capable of breaching new heights as it continues to empower its merchants with impressive new technologies. As Shopify shifts gears from logistics to other tech (think generative artificial intelligence), the SHOP stock growth narrative becomes that much more interesting for young Canadian growth investors.
After SHOP stock’s recent rally, shares have become somewhat pricy. At least pricy enough to be downgraded by some analysts out there. That said, the shares are pricy as some of the hottest AI stocks south of the border?
Probably not. In fact, I’d argue Shopify stands out as one of the expensive growth stocks that stands to benefit from the one-two combo of lower interest rates and a pick-up in the AI boom. And let’s not forget about the potential for consumers to spend more money across their favourite digital retailers.
All considered, it’s hard not to love Shopify stock again, given how the tides have gradually shifted back in favour of the Canadian titan that now boasts a respectable market cap of $138.6 billion. Shopify’s the real deal. And its rally may be tough to stop if the tech sector doesn’t “correct” in a way that the bears expect it to.
As rate cuts add up over time, Shopify stock stands out as one of the most exciting plays on the TSX Index once again. I don’t expect this to change, even if Canada’s economy hits a few potholes in the coming months. At the end of the day, Shopify’s in it for the long haul, and it will make moves that stand to bolster its prospects.
Air Canada stock’s tough ride could continue
The Canadian airline has had its fair share of glimmers, but nothing has really helped propel the stock back to cruising altitude. There always seems to be something that drags Air Canada closer to the ground. It can be a frustrating experience as an investor, but I do think shares of AC offer a great risk/reward profile for 2024, as the firm finally begins to see a few headwinds fade as new tailwinds stand to step in and take their place.
Air Canada seems stuck in the $18 range after its late-summer plunge in 2023. If Canada is headed for a recession, I think bargain hunters have plenty of time to punch their ticket to board.
Indeed, turbulence may not be rewarded this year unless the economy surges higher in the back half. That’s always a possibility, but don’t count me as a raging bull on shares of AC just yet.
The Foolish bottom line
Shopify stock’s quarterly earnings results are up ahead, and it may be wise to watch the stock that’s sure to be a major mover. I think results could impress by enough to help add more heat to the recent run. Either way, I’m interested in hearing a bit more about the firm’s road ahead, specifically on the AI front, as investors tune into the coming conference call.
As for Air Canada, I’d be more cautious as a Canadian recession could continue to take a bite out of air travel demand. Between the two, SHOP stock seems to be more timely.
The post Better Buy: Air Canada Stock vs. Shopify appeared first on The Motley Fool Canada .
Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Shopify. The Motley Fool has a disclosure policy .
2024