Jason Thomson, portfolio manager at O’Neil Global Advisors, joined the Investing with IBD podcast this week to share his process for finding leading stocks in each market cycle. His shift from stock picking to business analysis helps him capture market leaders like Shopify stock. And not just for quick moves. He’s in it for the larger moves with enough of a position size to supercharge his portfolio returns. Finally, Thomson makes the case for a continued growth runway for Shopify (SHOP) and DocuSign (DOCU).
Audio Version Of Podcast Episode
Video Version Of Podcast Episode
Technology And Growth Might Need A Pause Before Moving
Jason Thomson likes the pivot of the last month as growth and technology came back into favor. Sure, a pause might be necessary here given the move after the correction. But the market seems to be back to a risk-on mentality favoring Thomson’s investing style.
Beyond the market indexes, Thomson monitors a core basket of stocks and exchange-traded funds (ETFs). This helps him determine where the money is flowing in the market. He sees inflation fears overemphasized in many investors’ minds, and that’s OK. It creates opportunity in price levels for growth stocks like Shopify stock.
Trade Ideas: Shopify Stock And DocuSign Stock
With growing experience, Thomson found that he’s shifted more from a stock picker to a business analyst. That means a deeper understanding of the fundamental story behind a company’s trajectory of growth. With this knowledge, he can build the conviction to establish a concentrated position in a stock.
Want your own deeper dive? DocuSign CEO Dan Springer joined IBD on an Investing Strategies segment
Thomson referred to an important lesson from IBD founder and former CEO William J. O’Neil. It’s not the chart that makes a stock go up. The earnings, revenue, expansion of market share etc. are the important drivers behind the stock price. By understanding the key performance indicators for a company, he can better gauge where a stock is in its growth cycle. And how much room it has left to grow.
Thomson also shared what he learned from a post-analysis of his own trading. Looking at his most successful trades as well as past market cycles, he has a blueprint for establishing his stock positions and knows the cognitive traps to avoid.
For Shopify stock, that meant starting his buying at the bottom of a base and as it climbed the right-hand side. It’s a different approach from the traditional breakout.
But at the end of the day, it’s the story behind Shopify stock that gets his attention. Making it easier for small-businesses to establish an online presence is key. The pandemic may have accelerated the need for some businesses to go through the process. But the total addressable market leaves plenty of growth for Shopify stock, even after it’s huge move so far.
Like Shopify stock, DocuSign stock saw increased adoption during the pandemic. There are plenty of fears that their technology could easily be overwhelmed by larger competitors, like Adobe (ADBE). However, Thomson sees a large competitive advantage for DocuSign stock as a dominant brand in that space.
Want More? Research Shopify Stock Using IBD Tools
The IBD Stock Checkup can give a quick assessment of the fundamental criteria that a stock excels in and areas worth further exploration. Thomson noted while the estimates get a red mark for Shopify stock, it has a history of beating expectations to a large degree.
You will also find both Shopify stock and DocuSign stock are members of IBD’s Leaderboard. Leaderboard provides both fundamental and technical analysis for members of its Leaders List.
If you’re looking for more stock ideas check out IBD’s Stock Lists page. Both Shopify stock and DocuSign stock are members of the flagship IBD 50 stock list as well, while DocuSign stock also met the stringent criteria for the Sector Leaders list and currently holds the top spot on the Big Cap 20 list.
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