Q: Further to my question on the ability of Shopify to regain its lost glory and confidence among investors, there is another thing that intrigues me . i.e. in your balnced portfolio, among all stocks, Shopify has the lowest return since inception of 2013 ( -20% as of April24). There must be some strong reason for its continued (despite good top and bottom lines! )poor show which we common investors fail to gauge. But it seems to have escaped your eagle eyes too. So the question is whether its portfolio rating of A- is a much inflated one and needs to be revisited.
5i Research Answer:
We had the company in our Growth Portfolio, where it went up massively after it went into the portfolio. Once it became a mega-billion dollar company, we sold out of growth and added a smaller position to the Balanced Portfolio. The timing of this was not ideal. But SHOP only went pubic in 2015 so we would not use 2013 as a reference point. We re-visit ratings after results, but we do focus more on the fundamentals than the stock activity. EPS is expected to go from 22c in 2023 to $1.37 in 2025. It is still growing and still has global potential.