Looking back to the biggest winners of the last year is seldom all too useful, especially for those new investors who think history will repeat itself in 2025. Undoubtedly, past performance is no guarantee of future results — it’s the common saying you’ve probably heard many times. And to an extent, it’s true. The leaderboard of last year is likely to look very different from the one we’ll have by the end of this year. As you’d imagine, there are sure to be more than a few surprises as well, as some of the underrated names work their way to the top of the list while the well-known, previously red-hot tech plays deliver less impressive results.
In any case, some companies can see their share price momentum continue in the new year. Undoubtedly, not a whole lot changes when the page turns on a new year. And while I wouldn’t suggest backing up the truck on last year’s performers with expectations of more big gains, I think that the list is worth checking out in case there are names that are still attractively valued.
When it comes to the big gainers, I personally want to see improving fundamentals and an enhanced growth narrative, but, most importantly, appreciation is driven by sales and earnings growth. Indeed, whenever earnings back up a stock and there’s limited multiple expansion, I think there’s ample gas for a continued rally. Of course, the outperformer’s list in any given year is sure to see many names that have been given a jolt by improved growth prospects, higher earnings, and multiple expansion.
In any case, multiple expansion-driven rallies of firms that aren’t yet profitable should have value investors proceeding with caution as these such names can be most vulnerable to a correction. Without further ado, let’s quickly look at a pair of outperformers that I think could fare well in the next three to four years.
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Shopify
Shopify (TSX:SHOP) stock had an incredible 2024, thanks in part to that November spike in response to an impressive quarterly earnings result. Undoubtedly, since the spike, which propelled shares toward $160 per share, there’s been some noisy consolidation. Undoubtedly, the stock could go either way based on how the next round of earnings goes.
In any case, I’d treat any big dips as more of an entry point, given Shopify’s fundamentals and growth story have gotten markedly better in the past year. Add the company’s opportunity in artificial intelligence (AI) into the equation, and I view Shopify as one of Canada’s best high-tech innovators.
Over the past year, shares are up around 52%, beating the TSX Index by a wide margin. Though Shopify may not be one of the biggest 2024 winners, I view it as one of the most buyable, given its modest valuation and exciting new developments. The company has been wheeling and dealing with a focus on AI and machine learning. With some new AI talent brought aboard, I’d not dare sleep on SHOP stock in 2025, even if it means having to deal with more bumps in the road.
