Better Buy: WELL Health Stock or Shopify Stock?

Shopify (TSX:SHOP) is well known as one of the best growth stocks that Canadians can buy. Even with the pullback in 2022, since it went public in May 2015, it’s up 1,960%. WELL Health Technologies (TSX:WELL), meanwhile, has many similarities to Shopify. It’s a high-growth tech stock that’s been executing exceptionally well and has tonnes of growth potential.

In addition to the growth potential that both these stocks have, though, both are also trading well undervalued, especially after 2022, when stocks across the board, particularly in the tech sector, saw major declines.

If you’re wondering which is the best stock to buy now, here’s what to consider before you decide to pull the trigger.

Shopify stock

There’s a reason why Shopify is one of the most popular stocks in Canada. Since going public and earning investors a nearly 2,000% return, Shopify’s stock price has increased at a compound annual growth rate of more than 46.8%.

Today, it has a market cap north of $80 billion, making it considerably larger than WELL Health, which is still a small-cap stock.

Furthermore, in addition to the size of Shopify, it also has a more dominant position in its industry, e-commerce. Both of these factors help Shopify to have less risk, since it already has such an excellent footprint in the industry.

It’s also worth noting that on top of the fact Shopify is one of the leaders in the e-commerce space, the industry also has a tonne of potential to grow for years to come.

So, while Shopify can seem exciting for its rapid and short-term growth potential, it’s also a stock that investors can buy and hold for years, another reason why it’s one of the top stocks in Canada.

Plus, with Shopify trading roughly 70% off the highs it hit in November 2021, investors still have an unbelievable opportunity to buy the stock at an attractive discount.

Over the last three years, Shopify has seen its sales increase from less than $1.6 billion in 2019 to roughly $5.6 billion in 2022 — an increase of 255%.

Furthermore, analysts expect sales will grow more than 18% this year, even with the struggling economy as well as by more than 23% next year.

Therefore, with Shopify stock trading at an enterprise value-to-sales ratio of just 9.6 times, below its three-year average of 25 times, it’s certainly one of the best and highest-potential growth stocks that Canadians can buy now.

WELL Health stock

In the case of WELL Health, while it does have some similarities, such as being an incredibly well-run business and one with years of growth potential, too, there are a lot more differences to consider.

First off, the stock is much smaller than Shopify, with a current market cap of just $1.1 billion. That means WELL has a lot more opportunity for rapid growth since the pace at which a company can expand its business diminishes the larger it gets.

However, while it has higher growth potential over the next few years, smaller businesses that don’t have as dominant a position in their industry also have more risk, which is something crucial investors need to keep in mind.

Nevertheless, WELL is still a highly impressive stock with an incredible track record that sees it constantly outperform analyst expectations. Plus, WELL operates in the healthcare sector, which is much more defensive than e-commerce, especially in the current market environment.

The stock has seen consistent growth from the acquisitions it’s made, even after the tailwinds from the pandemic wore off. Furthermore, not only has it made attractive acquisitions in recent years, but the companies it has acquired have had tonnes of organic growth potential themselves, one of the main reasons why WELL continues to see such impressive and consistent growth.

In fact, in the past three years, it’s actually grown its revenue much faster than Shopify stock, from $32.8 million in 2019 to $569 million in 2022 — an increase of over 1,600%.

Therefore, while both stocks are some of the top companies in Canada and have tremendous growth potential, if I had to give one the edge today, WELL Health stock seems like the slightly better option for most investors.

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