James Brumley, The Motley Fool
7 min read
The stock market’s recent AI-led rout may have finally stabilized. But, let’s face it — it rattled investors’ confidence. The names that were must-haves just a few weeks ago now feel uncomfortably risky, and even pose an indirect threat to other tickers. It might be time to rethink what your portfolio should look like going forward.
If you’re sitting on $3,000 right now that you’re looking to put to smart use for a while, here’s a rundown of three stocks that could prove to be solid picks for the foreseeable future.
Missed AI’s “Act 1”? Act 2 Could Be 16x Bigger. Most investors think they missed the AI boat because they didn’t buy Nvidia in 2005. But according to our analysts, we’re only at the end of “Act 1″—the R&D phase. “Act 2” is the global rollout. Continue »
1. Shopify
Given nothing more than the stock’s sell-off following the release of its third-quarter results, it would be easy to presume the worst of Shopify (NASDAQ: SHOP). Shares of the e-commerce outfit fell nearly 9% the day it reported third-quarter revenue of $3.74 billion, which fell just a tad short of analysts’ estimates of $3.75 billion. The total amount of merchandise sold via its platform also fell short of expectations, as did gross profits.
Just don’t lose perspective on the matter. Shopify’s revenue still improved by 32% year over year, while gross profit grew by 28%. Free cash flow was up 61% year over year as well, and free-cash-flow margins widened from 18% in Q3 of last year to 22% this time around.
Did shares stumble because the stock was priced for an earnings beat? Not necessarily. As of the Monday before that setback, Shopify shares were already down 13% from their October peak. The recent tumble may have largely been the result of the overall market environment at the time, when artificial intelligence stocks were just starting to show serious cracks. A closer, second look at this ticker in the meantime indicates investors are trickling back into it, perhaps confident that Shopify’s fourth-quarter revenue growth guidance in the low-30% range is likely despite Q3’s top-line miss. Gross profit growth is also apt to be almost as firm.
The bigger underlying reason to take a swing on this stock, of course, is the ongoing demand that brands and online sellers are driving for their own e-commerce platforms, which allows for better storytelling. Consumers still like and use mega-online malls like Amazon, but they’re becoming customers of brands they personally connect with — something Amazon can’t quite facilitate.
