1 Magnificent Growth Stock to Buy Right Now
There is no shortage of stocks to pick for your self-directed investment portfolios, especially when the market has a good bullish momentum going. As of this writing, the S&P/TSX Composite Index, which is the Canadian stock market's benchmark index, is up by 24.5% from its 52-week low.
The summertime rally seems to be in full swing, and the next few weeks might get really hot for several growth stocks on the TSX. Many of the top recovering growth stocks are those that plenty of investors left behind amid tariff-related uncertainties hitting the market.
When the market is flirting with all-time highs, like it is right now, it might be a little worrying to invest due to the fear of a bear run wiping away all your gains.
Enjoying lasting success as a stock market investor doesn't mean making the best of short-term price movements on the market that fluctuate every few weeks. To amass the kind of generational wealth many successful people strive for, you must adopt a long-term perspective on stock market investing.
Against this backdrop, here is a stock that I would advise people with the stomach to handle a little risk to consider for their self-directed investment portfolios.
Shopify (TSX:SHOP) is a $203.03 billion market-cap Canadian e-commerce platform developer that took the TSX by storm when it went public. The hyper-volatile, hyper-growth stock rapidly became the biggest publicly-traded company on the TSX by market cap, replacing one of the long-standing TSX giants. However, a meltdown in the global tech sector saw it fall far from grace in 2022 to more reasonable levels.
Since its decline, Shopify stock has constantly been working on recovering to better heights. The company itself, however, is not a bad business. Shopify is leveraging the global shift toward omnichannel platforms. Shopify is also integrating artificial intelligence (AI) to streamline operations and boost profitability.
The company's performance shows how well it has been doing recently. In the first quarter of this fiscal year, Shopify reported an impressive 27% year-over-year jump in revenue, and its free cash flow margin increased by 15% in the same period.
Shopify is also accelerating its B2B, offline, and international operations growth, painting a prettier picture for the tech stock in the long run.
If the company's revenues continue growing by 20-25% each year, and it gets closer to being profitable, the stock might be trading for much higher than it is today. Will it possibly reach its previously achieved all-time high valuations? It is possible to see that, but not without considerable bumps along the way.
Shopify is the kind of company that can weather the storm of market volatility. However, it is not going to be smooth sailing due to the dynamic and cyclical nature of stock markets. For investors who can ignore the short-term noise and can afford to hold on for years to see meaningful gains, Shopify stock might be one of the best investments they can make.
The post 1 Magnificent Growth Stock to Buy Right Now appeared first on The Motley Fool Canada.
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Trump repeatedly claimed, before and immediately after returning to the White House, that the country of origin for an imported good pays the cost of the tariffs and that Americans would not see any price increases from them. However, as economists and fact-checkers stressed, this is not the case. The companies importing the tariffed goods -- American companies or organizations in this case -- pay the higher costs. To compensate, companies can raise their prices or absorb the additional costs themselves. So, who ends up paying the price for tariffs? In the end, usually you, the consumer. For instance, a universal tariff on goods from Canada would increase Canadian lumber prices, which would have the knock-on effect of making construction and home renovations more expensive for US consumers. While it is possible for a company to absorb the costs of tariffs without increasing prices, this is not at all likely, at least for now. 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These were meant to take effect on April 9 but were delayed by 90 days due to historic stock market volatility, and then delayed again to Aug. 1. These rates are subject to change until that new effective date, and some have already been altered: the rate against Japan was upped to 25%, the same as the rate against South Korea; Trump has also threatened a 50% rate against Brazil. Trump's claim that these reciprocal tariffs are based on high tariffs imposed against the US by the targeted countries has drawn intense pushback from experts and economists, who have argued that some of these numbers are false or potentially inflated. For example, the above chart says a 39% tariff from the EU, despite its average tariff for US goods being around 3%. Some of the tariffs are against places that are not countries but tiny territories of other nations. The Heard and McDonald Islands, for example, are uninhabited. We'll dig into the confusion around these calculations below. Notably, that minimum 10% tariff will not be on top of those steel, aluminum and auto tariffs. Canada and Mexico were also spared from the 10% minimum additional tariff imposed on all countries the US trades with. On April 11, the administration said smartphones, laptops and other consumer electronics, along with flat panel displays, memory chips and semiconductors, were exempt from reciprocal tariffs. But it wasn't clear whether that would remain the case or whether such products might face different fees later. How were the Trump reciprocal tariffs calculated? The numbers released by the Trump administration for its barrage of "reciprocal" tariffs led to widespread confusion among experts. Trump's own claim that these new rates were derived by halving the tariffs already imposed against the US by certain countries was widely disputed, with critics noting that some of the numbers listed for certain countries were much higher than the actual rates and some countries had tariff rates listed despite not specifically having tariffs against the US at all. In a post to X that spread fast across social media, finance journalist James Surowiecki said that the new reciprocal rates appeared to have been reached by taking the trade deficit the US has with each country and dividing it by the amount the country exports to the US. This, he explained, consistently produced the reciprocal tariff percentages revealed by the White House across the board. "What extraordinary nonsense this is," Surowiecki wrote about the finding. The White House later attempted to debunk this idea, releasing what it claimed was the real formula, though it was quickly determined that this formula was arguably just a more complex version of the one Surowiecki deduced. What will the Trump tariffs do to prices? In short: Prices are almost certainly going up, if not now, then eventually. That is, if the products even make it to US shelves at all, as some tariffs will simply be too high for companies to bother dealing with. While the effects of a lot of tariffs might not be felt straight away, some potential real-world examples have already emerged. Microsoft has increased prices across the board for its Xbox gaming brand, with its flagship Xbox Series X console jumping 20% from $500 to $600. Kent International, one of the main suppliers of bicycles to Walmart, announced that it would be stopping imports from China, which account for 90% of its stock. Speaking about Trump's tariff plans just before they were announced, White House trade adviser Peter Navarro said that they would generate $6 trillion in revenue over the next decade. Given that tariffs are most often paid by consumers, CNN characterized this as potentially "the largest tax hike in US history." Estimates from the Yale Budget Lab, cited by Axios, predict that Trump's new tariffs will cause a 2.3% increase in inflation throughout 2025. This translates to about a $3,800 increase in expenses for the average American household. Reith, the IDC analyst, told CNET that Chinese-based tech companies, like PC makers Acer, Asus and Lenovo, have "100% exposure" to these import taxes, with products like phones and computers the most likely to take a hit. He also said that the companies best positioned to weather the tariff impacts are those that have moved some of their operations out of China to places like India, Thailand and Vietnam, singling out the likes of Apple, Dell and HP. Samsung, based in South Korea, is also likely to avoid the full force of Trump's tariffs. In an effort to minimize its tariff vulnerability, Apple has begun to move the production of goods for the US market from China to India. Will tariffs impact prices immediately? In the short term -- the first days or weeks after a tariff takes effect -- maybe not. There are still a lot of products in the US imported pre-tariffs and on store shelves, meaning the businesses don't need a price hike to recoup import taxes. Once new products need to be brought in from overseas, that's when you'll see prices start to climb because of tariffs or you'll see them become unavailable. That uncertainty has made consumers anxious. CNET's survey revealed that about 38% of shoppers feel pressured to make certain purchases before tariffs make them more expensive. About 10% say they have already made certain purchases in hopes of getting them in before the price hikes, while 27% said they have delayed purchases for products that cost more than $500. Generally, this worry is the most acute concerning smartphones, laptops and home appliances. Mark Cuban, the billionaire businessman and Trump critic, voiced concerns about when to buy certain things in a post on Bluesky just after Trump's "Liberation Day" announcements. In it, he suggested that consumers might want to stock up on certain items before tariff inflation hits. "It's not a bad idea to go to the local Walmart or big box retailer and buy lots of consumables now," Cuban wrote. "From toothpaste to soap, anything you can find storage space for, buy before they have to replenish inventory. Even if it's made in the USA, they will jack up the price and blame it on tariffs." CNET's Money team recommends that before you make any purchase, especially a high-ticket item, be sure that the expenditure fits within your budget and your spending plans. Buying something you can't afford now because it might be less affordable later can be burdensome, to say the least. What is the goal of the White House tariff plan? The typical goal behind tariffs is to discourage consumers and businesses from buying the tariffed, foreign-sourced goods and encourage them to buy domestically produced goods instead. When implemented in the right way, tariffs are generally seen as a useful way to protect domestic industries. One of the stated intentions for Trump's tariffs is along those lines: to restore American manufacturing and production. However, the White House also says it's negotiating with numerous countries looking for tariff exemptions, and some officials have also floated the idea that the tariffs will help finance Trump's tax cuts. Those things are often contradictory: If manufacturing moves to the US or if a bunch of countries are exempt from tariffs, then tariffs aren't actually being collected and can't be used to finance anything. This and many other points have led a lot of economists to allege that Trump's plans are misguided. As for returning -- or "reshoring" -- manufacturing in the US, tariffs are a better tool for protecting industries that already exist because importers can fall back on them right away. Building up the factories and plants needed for this in the US could take years, leaving Americans to suffer under higher prices in the interim. That problem is worsened by the fact that the materials needed to build those factories will also be tariffed, making the costs of "reshoring" production in the US too heavy for companies to stomach. These issues, and the general instability of American economic policies under Trump, are part of why experts warn that Trump's tariffs could have the opposite effect: keeping manufacturing out of the US and leaving consumers stuck with inflated prices. Any factories that do get built in the US because of tariffs also have a high chance of being automated, canceling out a lot of job creation potential. To give you one real-world example of this: When warning customers of future price hikes, toy maker Mattel also noted that it had no plans to move manufacturing to the US. Trump has reportedly been fixated on the notion that Apple's iPhone -- the most popular smartphone in the US market -- can be manufactured entirely in the US. This has been broadly dismissed by experts, for a lot of the same reasons mentioned above, but also because an American-made iPhone could cost upward of $3,500. One report from 404 Media dubbed the idea "a pure fantasy." The overall sophistication and breadth of China's manufacturing sector have also been cited, with CEO Tim Cook stating in 2017 that the US lacks the number of tooling engineers to make its products. For more, see how tariffs might raise the prices of Apple products and find some expert tips for saving money.
