Are you searching for the next million-dollar opportunity? Look no further: it’s in technology. But which segment of the technology? Automotive, energy, retail, payments, gaming, hardware, cloud infrastructure, enterprise software. The list is long. When you talk about the next wave and the next stock market rally, you can’t ignore retail.
How to make $1 million by investing in retail?
What makes me bullish about retail is the globalization of retail and the acceptance of e-commerce. North American market has saturated and is now growing by just the single digits. But the Asia-Pacific market presents a huge opportunity.
The pandemic has cleaned up the retail market. Many retail stores with weak fundamentals went bankrupt. Only the strong ones sustained the test of time. The industry is now optimizing its expenses to remain profitable. Many retailers have witnessed the many advantages of e-commerce like convenience, cost-efficiency, consumer reach, and optimization.
During the pandemic, most of the physical store traffic moved online, making it a terrific year for e-commerce companies. But as the world economy moves toward recovery, the physical store traffic will return. The best way to make millions in retail is to get exposure to this shift with a mix of growth and dividend stocks.
Shopify stock
The first exposure is e-commerce. Your retail portfolio is incomplete without Shopify (TSX:SHOP)(NYSE:SHOP). Shopify has challenged Amazon in its own market, which is the United States. In 2020, it grabbed an 8.6% share of the U.S. retail e-commerce sales, only next to Amazon.
Shopify stock has made many millionaires. A $20,000 investment five years back will convert to over $1 million today. Now, most of the credit goes to the pandemic rally when the stock almost tripled. It is difficult to say when the share will see such a rally again. But with its normal growth, it can still make you a millionaire in 10 years.
Shopify has immense growth potential as it taps market share, broadens its portfolio, and expands its geographic reach. The stock is like Amazon five years back, which keeps beating its own valuation. Amazon grew even beyond US$1 trillion valuations, and Shopify can reach this level by 2030.
Lightspeed POS stock
If you think Shopify stock is expensive and 2021 is the recovery year for physical stores, Lightspeed POS (TSX:LSPD)(NYSE:LSPD) is the stock for you. Its omnichannel solutions platform gives you the best of both worlds. The platform integrates online and physical stores and allows merchants to manage everything from orders to inventory to payments in one place.
Lightspeed goes beyond retail and captures the hospitality industry as well. The Lightspeed platform equips small and mid-sized businesses with enterprise-level solutions, giving it a well-diversified customer base. The company is in the high-growth stage, with revenue growing at an annual rate of 55% and the stock rising 380% in two years.
Lightspeed is making several acquisitions to grab market share in the global cloud point of sale (POS) space. It is seeing a shift from being a good-to-have technology to a need-to-have technology. Look at it this way, a mobile phone was a luxury in 2000, but it is a necessity today. Lightspeed’s growth has just started. If it can maintain this momentum with innovation and scalability, it is the next Shopify in the making, your next million-dollar opportunity.
SmartCentres REIT
If you believe that online stores can’t replace physical stores, then SmartCentres REIT (TSX:SRU.UN) is the stock for you. It is Canada’s largest retail REIT, and has a large exposure to Walmart and other big essential retailers with high creditworthiness. This high exposure to such retail stores enabled it to pay regular dividends.
The pandemic closed several stores and significantly impacted its rent collection. But Canada Emergency Commercial Rent Assistance (CECRA) and high exposure to strong retailers helped it recoup deferred rent.
Many other REITs cut their dividend per share by 33-50% last year. But SmartCentres maintained its dividend per share. While the stock is still trading at a 17% discount from its pre-pandemic level, it will recover with the economy. If you buy the stock now, you can lock in a 7% yield and enjoy the 17% recovery rally.
