Shopify Fashions An Alluring Chart
E-commerce giant Shopify ($SHOP) was one of the first stocks to breakout in April 2020 after the COVID-19 bear market ended. After rallying from $600 to $1,400, it has been consolidating for much of 2021. It does, however, look like it may be starting to wake up.
Shopify appears to be forming the right side of a very large cup and handle base. Big bases like this offer enormous potential as their corrective action often shakes out weak hands. In addition, SHOP has fashioned an alluring chart over the past few weeks. I particularly like the large volume three weeks ago followed by the tight action over the last two weeks.
Shopify has continued to produce stellar fundamentals, with five consecutive quarters of triple-digit earnings coupled with consistent sales growth. SHOP has undoubtedly benefited from the COVID-19 pandemic as online shopping has flourished. However, they are also estimated to have strong annual earnings in 2022 when the world is likely to be fully reopened.
What really stands out to me about Shopify is the strong institutional support. The number of funds owning SHOP has been steadily increasing over the last year, and some of the most well-respected funds such as the Fidelity Contrafund currently own shares. While I do not own Shopify, it is definitely a stock that I will be watching in the coming weeks for an entry point.
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