5 Best Stocks to Buy and Hold for the Next 15 Years According to Cathie Wood’s Portfolio

3. Shopify Inc. (NYSE:SHOP)

Number of Hedge Fund Holders: 74

Shopify Inc. (NYSE:SHOP) is one of the most favorite stocks of Cathie Wood. Cathie Wood’s hedge fund bought a stake in Shopify Inc. (NYSE:SHOP) back in the second quarter of 2017. The fund had a $573 million stake in Shopify Inc. (NYSE:SHOP) as of the end of the second quarter of 2023. Shopify Inc. (NYSE:SHOP) shares have gained about 50% year to date. Analysts are praising Shopify Inc. (NYSE:SHOP)’s deal with Amazon that would allow Shopify merchants to offer a Buy with Prime option for payment processing and fulfillment.

ARK Invest’s Andrew Kim also commented on the deal:

“Now, having sold Shopify Logistics to Flexport, Shopify no longer competes with Amazon in fulfillment, which has paved the way for compromise. Although Shopify now owns 6% of Flexport, the lower priced logistics service, the introduction of Amazon’s fulfillment services does erode its moat as Shopify’s official logistics provider.”

RiverPark Large Growth Fund made the following comment about Shopify Inc. (NYSE:SHOP) in its Q2 2023 investor letter:

“Shopify Inc. (NYSE:SHOP): Shopify shares were a top contributor in the quarter following strong 1Q results and the announced divestiture of its logistics business. Gross Merchandise Volume (GMV) grew 15% year over year as e-commerce sales broadly rebounded and Shopify continued to take market share. Revenue grew 25% driven by increased merchant adoption of multiple products, especially Shop Pay. The company generated $86 million of free cash flow, up from a $46 million loss last year, and announced expectations to be free cash flow positive for each quarter for the rest of the year. The company had previously announced several cost savings plans, which are driving margin and free cash flow improvement, and now plans to divest its capital-intensive logistics arm. Faster growing revenue, lower operating expenses, and a less capital-intensive future were all cheered on by the market.

Last year, 10% of US retail e-commerce sales flowed through SHOP, second only to Amazon, and the company is still enjoying significant tailwinds as retail merchants of all sizes adopt SHOP’s software tools to display, manage and sell their products across a dozen different sales channels. We believe that the overall growth of e-commerce, combined with the development of new products and services, such as its digital wallet Shop Pay, should continue to drive revenue growth of more than 20% per year over the next several years, accompanied by re-acceleration of operating margin growth and FCF generation.”