Start the conversation
The annual summer online shopping season is already in high gear; this most recent Prime Day, Amazon booked $11 billion in sales in just 48 hours.
Performance like that makes it easy to see why Amazon.com Inc. (NASDAQ: AMZN) is up something like 405% over the past five years.
Impressive... but I know a company that leaves even that enviable performance in the dust.
Not only that, but it's no exaggeration to say Amazon probably couldn't be Amazon without this outfit; this firm drives a great deal of Amazon's business.
To be clear, I'm not changing my bullish outlook on Amazon. But the fact is, own this stock, and you'll do even better.
Think of it as a "backend" play on Amazon - a backend that happens to have done better than 10X Amazon's five-year returns.
The gains are not all in the rearview mirror, either; I'm expecting at least 300% more before long...
The Amazon Supplier That Helps Bring in $282,000 a Day
Amazon is... Amazon, a has-it-all, one-stop shop Internet emporium with nearly everything you need for sale - TVs, laptops, light bulbs, soap, diapers - at the click of a button. That was a powerful idea even before the coronavirus hit.
And even with the pandemic seemingly receding, there's no sign of that changing anytime soon.
A Statista forecast from 2017 predicted a 58% rise in online sales between 2017 and 2023, from $468 billion to $740 billion. But of course, that forecast is "B.C." - before COVID-19.
And here's where Amazon's secret weapon - its hidden "supercharger" - comes into play. I'm talking about Shopify Inc. (NYSE: SHOP).
See, as powerful as Amazon is - and it is powerful - it simply can't handle the sheer, overwhelming load generated as it "rings up" $4,722 in sales every minute of every day.
That's why it quietly launched a program several years ago that lets third-party vendors sell their products on Amazon's website. It was a very savvy move that has really paid off.
In roughly 13 years, the percentage of third-party sellers has more than doubled. It was just 26% back in 2007. But in this year's first quarter, that figure came in at 55%.
Shopify provides "e-tailers" - more than 1 million in 175 countries - with sophisticated software that allows them to plug into Amazon, manage orders, collect payments, and send out e-mails to buyers.
The stock itself, SHOP, really stands out, even in the high-flying tech sector. SHOP only began trading just over six years ago, on May 26, 2015, to be exact.
A Rare Track Record, Even for a Tech Stock
As is often true with new stocks hitting the market, trading was choppy for the first six months. And then Wall Street soured on the firm, sending shares to a post-IPO low on Feb. 8, 2016, when it closed at $19.33.
That provided one of the all-time great tech comeback stories as the stock began its historic run in the spring of 2016. Over the past five years, SHOP has gained roughly 4,500%.
Consider that for all of 2014, Shopify had a mere $100 million in sales, according to data compiled by Macrotrends. It recently scored $977 million in sales in last year's fourth quarter.
In 2020, total sales came in at a stunning $2.9 billion. That translates into a seven-year gain of 2,800%.
Shopify accomplished all of this with a fraction of the brand awareness Amazon enjoys. And I think the future is just as bright, even if its earnings growth slows considerably.
Over the past three years, Shopify has grown its sales by an average of 62%. At that pace, it roughly doubles every 14 months.
Over the past three years, it has averaged earnings growth 178%, according to data compiled by Investor's Business Daily.
To be conservative with our forecast - always a good idea when putting your money somewhere for the long term - let's pare that growth rate down by, say, two-thirds. That'd be a 60% growth rate, give or take.
Even at that lower rate, per-share profits will double twice more in the next three years. And even if, to be conservative, we cut our forecast in half again, we're still sitting on top of a gold mine with Shopify, a veritable license to print money.
That's the kind of wealth-making potential unleashed innovation can put in your hands, and, as I often say, we're living in a kind of "Golden Age" of innovation, particularly right here in the United States.
Consider this: There are around 500 companies, many of them tech firms, waiting to go public right now and take advantage of the $569 billion in fresh capital that's flooded the markets since November 2020. This really gets to the heart of the opportunity my friend and colleague Shah Gilani was talking about recently.
See, many of these companies offer something called "pre-IPO rights," sometimes for around $1. And these investments have the potential to soar to dizzying highs if the company goes public - in exceptional cases, folks have made peak gains of 2,088%, 8,280%, and even 27,550%. Again, those are exceptional examples, but they really highlight the kinds of gains pre-IPO rights can produce. Take a look right here to learn more from Shah himself.
About the Author
Michael A. Robinson is a 36-year Silicon Valley veteran and one of the top tech and biotech financial analysts working today. That's because, as a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs, scientists, and high-profile players. And he brings this entire world of Silicon Valley "insiders" right to you...
- He was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon.
- He was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
- As cyber-security was becoming a focus of national security, Michael was with Dave DeWalt, the CEO of McAfee, right before Intel acquired his company for $7.8 billion.
This all means the entire world is constantly seeking Michael's insight.
In addition to being a regular guest and panelist on CNBC and Fox Business, he is also a Pulitzer Prize-nominated writer and reporter. His first book Overdrawn: The Bailout of American Savings warned people about the coming financial collapse - years before the word "bailout" became a household word.
Silicon Valley defense publications vie for his analysis. He's worked for Defense Media Network and Signal Magazine, as well as The New York Times, American Enterprise, and The Wall Street Journal.
And even with decades of experience, Michael believes there has never been a moment in time quite like this.
Right now, medical breakthroughs that once took years to develop are moving at a record speed. And that means we are going to see highly lucrative biotech investment opportunities come in fast and furious.
To help you navigate the historic opportunity in biotech, Michael launched the Bio-Tech Profit Alliance.
His other publications include: Strategic Tech Investor, The Nova-X Report, Bio-Technology Profit Alliance and Nexus-9 Network.