SQSP - Shopify: Way Too Cheap For What's Coming
2024-03-17 08:41:47 ET
Summary
- Shopify appears expensive based on its present valuation, but the stock appears cheaper when compared with its potential for growth and improved profitability in the coming years.
- The company's high-quality revenue base, low churn, and pricing power contribute to its potential outperformance.
- Shopify's ability to attract and monetize enterprise customers, as well as its strengthening brand, also contribute to its growth potential.
- If SHOP's multiple remains stable, which we think is likely, then the stock could see 50%+ upside through the end of 2025.
- We rate SHOP stock a 'Strong Buy'.
There's a great quote out there by hedge fund manager Steve Mandel that goes something like this:
"I don't need an analyst to tell me when a 10 PE stock is cheap. I need an analyst to tell me when a 40 PE stock is cheap."
The meaning of this quote is simply that it can be tricky to find value in expensive-looking stocks, but doing so can pay off big time....
Shopify: Way Too Cheap For What's Coming