Gerard Ferguson Shopify Inc. SHOP-T BUY Feb 05, 2019

He trimmed a bit. He'd beef up the position again if it dropped 10-15%. One of the companies that will dominate  the world for the next 1-2 decades. 

This type of company is out of his wheelhouse. He looks at cash flow; SHOP's free cash flow is too expensive. SHOP has been growing like gangbusters. He watches it, because it's significant in Canada. The changes in US taxation did not impair SHOP, surprisingly. Their business keeps going very well. Is a momentum name, but growth could slow and the street could focus on its cash flow down the road. The PE is rich.

Has been fantastic. Really good recent quarter. Right-sizing cost structure. Integrating with large-language-model search platforms, and so all searches essentially lead to Shopify. Taking advantage of AI, rather than being overcome by it.

"The NVDA of the North". Different businesses, but in the sense that everyone is flocking to that name. Very few tech names to own in Canada, so when we do find one it tends to get run up. In top 5 by market cap of TSX, and probably 6-7% of the entire TSX. That's huge.

Question now is "Does it deserve that premium valuation?" Reaching an all-time high. Very consumer driven. Expectations for growth are way too high. For her to look at it, would have to decrease by more than half. Too risky for her firm.

Fantastic business; however, has done well partly because it's one of a very few tech names in the TSX. Worries about valuation. Technicals are doing well -- higher highs and higher lows, above 200-day MA. But PEG ratio is over 3x. PE is about 90x, and forward is the same, for 30% growth rate. Any hiccups on meeting expectations, and the stock has a bit to fall.

Better risk-adjusted names elsewhere.

Are delivering on revenues; have upped that guidance in the past 2 quarters at 25% revenue growth. Have found their niche in mid/small businesses, a market that will continue to grow.  The valuation has fallen, though has never been low. Are hitting cash-flow break even, and are on the verge to  accelerate earnings growth. They have staying power.

A solid hold. Don't buy aggressively. Multiples are high, but execution phenomenal and will continue to. Margins will continue to expand. They are innovative. 

Increasingly turning to enterprise customers. Lots of room for e-commerce to grow. Expanding to other jurisdictions and geographies. Long runway for growth. Expensive, but so it always is with great companies that disrupt and define a whole new segment.

Remains very highly ranked within Canada on RSI. Bottomed out in April, but upward trend for a year now. Continues to go up. In tech, retailers have been picking up as central banks have started to cut interest rates.

High-priced stock, moves around. Big piece of the Canadian index, so an important stock for institutional investors. Nothing else like it in Canada, so it'll get lots of attention. RSI improving for last 18 months. Trading better than 91% of companies in the S&P. In general, earnings estimates being revised higher.

Coming up on old highs from 2021, so may be a bit of technical resistance. Growth stock. Right now, he's leaning more toward cyclical companies. But nothing about SHOP tells him it's not worth owning.