Canadians: Should You Buy Shopify or Lightspeed POS Today?

Technology stocks in North American markets have been throttled since late February in the face of rising bond yields. This has provided an appealing buy-in opportunity for investors who have been anxious about high valuations. Today, I want to look at two of the top-performing tech stocks on the TSX: Shopify (TSX:SHOP)(NYSE:SHOP) and Lightspeed POS (TSX:LSPD)(NYSE:LSPD). These top tech stocks have thrived in the same fast-growing industry.

The COVID-19 pandemic has sparked even more growth in this industry

The COVID-19 pandemic has pulverized the restaurant and entertainment industries. Small businesses that rely on a brick-and-mortar footprint have been forced to face this catastrophe head on. However, the e-commerce space has achieved massive growth over the same period. The closure of traditional retail has pushed even more consumers to digital alternatives. According to new data from IBM’s U.S. Retail Index, the pandemic has accelerated the shift to e-commerce by five years.

Shopify and Lightspeed POS have benefited from this trend. Which is the better buy today? Let’s jump in.

Why Shopify has been a dominant tech stock since its TSX launch

Shopify provides a commerce platform and services around the world. Shares of Shopify were up 1.5% in late-morning trading on March 11. This top tech stock has plunged 24% over the past month.

The company released its fourth-quarter and full-year 2020 results on February 17. Revenue grew 86% year over year to $2.29 billion. Subscription Solutions revenue rose 41% to $908 million while Merchant Solutions revenue increased 116% to $2.02 billion. Meanwhile, Gross Merchandise Volume climbed 196% to $119 billion. Shopify delivered record sales during the Black Friday-Cyber Monday shopping weekend. It exceeded the previous year’s sales numbers by Saturday afternoon.

Shopify boasts an excellent balance sheet and is on track for big growth. It has recently achieved profitability and has its eyes on international expansion. The top tech stock last had an RSI of 38, putting Shopify just outside technically oversold territory.

Can Lightspeed POS surpass its elder?

Lightspeed POS is a Montreal-based company that provides commerce enabling Software as a Service (SaaS) platform for small and midsize businesses, retailers, restaurants, and golf course operators. Its shares were up 4.8% in late-morning trading on March 11. The tech stock has dropped 17% month over month. However, Lightspeed stock is up 212% from the prior year.

Investors got a look at its Q3 fiscal year 2021 results on February 4. Its adjusted net loss fell to $7.1 million — down from $5.9 million in Q3 FY2020. Meanwhile, total revenue rose 79% to $57.6 million. The company saw customer locations increase to over 115,000 overall after the acquisition of Upserve and ShopKeep. Gross Transaction Value increased 48% year over year to $9.1 billion with ShopKeep and Upserve collectively contributing $1.1 billion.

Management reiterated that it remains cautious in this uncertain environment, as it looks ahead to the final quarter of fiscal 2021. Lightspeed possesses an adequate balance sheet, and its growth prospects cannot yet hope to rival Shopify’s. Shares of this tech stock last had an RSI of 42, just missing the buy signal.

Which is the better buy today?

It is worth buying the dip in both tech stocks after the most recent bloodbath. However, I’m more inclined to bet on Shopify considering its promising growth prospects over this decade.

On the topic of Lightspeed stock…

Should you invest $1,000 in Lightspeed POS right now?

Before you consider Lightspeed POS, you may want to hear this.

Motley Fool Canadian Chief Investment Advisor, Iain Butler, and his Stock Advisor Canada team just revealed what they believe are the 10 best stocks for investors to buy right now… and Lightspeed POS wasn’t one of them.

The online investing service they’ve run since 2013, Motley Fool Stock Advisor Canada, has beaten the stock market by over 3X. And right now, they think there are 10 stocks that are better buys.

Learn More Today!

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O’Callaghan has no position in any of the stocks mentioned. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of and recommends Shopify and Shopify. The Motley Fool owns shares of Lightspeed POS Inc.

Article Tags:
Article Categories: