We recently compiled a list of the 12 Best Growth Stocks to Buy and Hold for the Long Term. In this article, we are going to take a look at where Shopify Inc. (NASDAQ:SHOP) stands against the other growth stocks.
What’s the Bull Case for US Equities?
The market closed last week mostly lower, however, the S&P 500 has been up more than 7% since April 11, indicating a returning positive sentiment. On May 10, David Lefkowitz, Equity Strategist at UBS Global Wealth Management, joined CNBC to discuss his bull case for the US equities. Lefkowitz acknowledged the volatility that has been around since the tariff announcement; however, he believes that backdrop remains fairly constructive. He elaborated that the market has had some significant buy signals since early April, characterised by the volatility index giving one of the highest readings, investor sentiment being cautious, and investor positioning has been depressed. Historically speaking, whenever these things have happened in the past, the US equities have performed exceptionally well in the preceding 6 to 12 months. Lefkowitz noted that he is not too concerned with the day-to-day news and volatility, as the market will get choppy on trade negotiation deals. Rather, he is more focused on the bigger picture, which indicates that stocks will ultimately end up higher over the next 12 months.
While answering a question regarding the recent rebound in the market, Lefkowitz highlighted that when the volatility index comes down, as it has over the past few weeks, history tells us that the market does not make new lows. Although the market will still be chopping a little. However, it is anticipated to stay within the historic average of 5%. Moreover, the equity strategist is also not concerned about the valuations and believes that as soon as the companies start posting earnings growth, the backdrop will help the market reach its next high.
While talking about his most convicted sectors, Lefkowitz noted that he likes secular growth stocks. He elaborated that growth as a sector was hit earlier this year due to doubts regarding AI trends and its ability to generate a return on investment. This has resulted in the sector being at the bottom of the market. However, Lefkowitz believes that the demand for AI products and the sophisticated infrastructure will keep growing for at least the next few years, thereby generating sustainable earnings growth.
Our Methodology
To compile the list of 12 best growth stocks to buy and hold for the long term, we used the Finviz stock screener, Seeking Alpha, and Insider Monkey’s Q4 2024 hedge fund database. Using the screener, we aggregated a list of growth stocks that have grown their sales by at least 30% over the past 5 years. Next, we cross-checked the 5-year sales growth for each stock from Seeking Alpha and ranked the stocks in ascending order of the number of hedge fund investors.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
An enthusiastic customer completing a purchase and receiving an order confirmation via one of the companies online sales channels.
Shopify Inc. (NASDAQ:SHOP)
5-Year Sales Growth: 40.26%
Number of Hedge Fund Holders: 64
Shopify Inc. (NASDAQ:SHOP) is an international e-commerce company based in Canada. It provides businesses with an all-in-one platform that allows them to create and operate online stores. The platform also offers an integrated back-office system where merchants can manage products and inventory, process orders and payments, and ship orders.
On May 9, J.P. Morgan analyst Reginald Smith maintained an Overweight rating on the stock and revised the price target to $115 from $124. The analyst noted that Shopify Inc. (NASDAQ:SHOP) recently announced its Q1 2025 results, highlighting 27% year-over-year growth, driven largely by a 29% rise in Merchant Solutions. Smith noted that the growth not only indicates strength in payments but also leads the company’s revenue to surpass Street targets. Moreover, the free cash flow margins of 15% also met the market consensus.
Smith also emphasized Shopify Inc.’s (NASDAQ:SHOP) competitive moat, broad product offerings, ease of use, and scale as key advantages fueling industry-leading growth. He projects compounded annual growth rates of 20% for revenue and 29% for operating profit through 2026. The company ranks as one of the growth stocks to buy and hold for the long term.
Overall SHOP ranks 6th on our list of the best growth stocks to buy and hold for the long term. While we acknowledge the potential of SHOP as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than SHOP but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.