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Is Shopify (SHOP) a Good Long-Term Holding?

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Is Shopify (SHOP) a Good Long-Term Holding?

ClearBridge Investments, an investment management company, released its “ClearBridge Growth Strategy” second quarter 2024 investor letter. A copy of the letter can be downloaded here. The strategy’s benchmark switched from the Russell 3000 Growth Index to the Russell Midcap Growth Index, during the quarter. Together with this, the strategy name was simplified from “ClearBridge Aggressive Growth” to “ClearBridge Growth”. Despite the difficult period for smaller cap stocks, the strategy outperformed the benchmark with contributions from holdings in health care and IT. Overall stock selection and sector allocation contributed to performance, relatively. In addition, please check the fund’s top five holdings to know its best picks in 2024.

ClearBridge Growth Strategy highlighted stocks like Shopify Inc. (NYSE:SHOP) in its Q2 2024 investor letter. Headquartered in Ottawa, Canada, Shopify Inc. (NYSE:SHOP) provides a cloud-based commerce platform and services. The one-month return of Shopify Inc. (NYSE:SHOP) was 7.33%, and its shares gained 9.27% of their value over the last 52 weeks. On July 5, 2024, Shopify Inc. (NYSE:SHOP) stock closed at $67.63 per share with a market capitalization of $87.135 billion.

ClearBridge Growth Strategy stated the following regarding Shopify Inc. (NYSE:SHOP) in its Q2 2024 investor letter:

“We also took advantage of recent price weakness to add Shopify Inc. (NYSE:SHOP) in the IT sector. Shopify is a leading global commerce enablement platform powering more than $250 billion in spend annually. With less than 2% penetration of the global ex-China retail market, the company still has significant runway as a share gainer addressing a very large and fragmented market. While the company recently increased spending on sales and marketing, we see potential for improved growth and margin leverage as it begins to see the fruits of these investments and believe Shopify can sustain strong operating profit and free cash flow growth over the long term.”

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A businesswoman using her mobile device to shop on a ecommerce platform.

Shopify Inc. (NYSE:SHOP) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 65 hedge fund portfolios held Shopify Inc. (NYSE:SHOP) at the end of the first quarter which was 68 in the previous quarter. In the first quarter, Shopify Inc.’s (NYSE:SHOP) revenue grew by more than 25%, excluding logistics (see the details here). While we acknowledge the potential of Shopify Inc. (NYSE:SHOP) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

We discussed Shopify Inc. (NYSE:SHOP) in another article and shared the list of best of breed stocks to buy for the third quarter of 2024 according to Bank of America. In addition, please check out our hedge fund investor letters Q2 2024 page for more investor letters from hedge funds and other leading investors.

READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.

Disclosure: None. This article is originally published at Insider Monkey.

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