CIBC manager takes the long view on tech stocks

Market tends to underestimate revenue growth, Stephen Carlin says.

Michael Ryval 24 May, 2018 | 5:00PM
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The market tends to under-appreciate the long-term potential of some technology players and that's where the opportunity lies, argues Stephen Carlin, lead manager of the 5-star-rated CIBC Global Technology.

"Look at a company like Shopify Inc. (SHOP), which targets the e-commerce sector. If you go back two years, analysts' estimates for revenue were around $600 million. But Shopify's revenue came in close to $1 billion," says Carlin, who is also managing director and head of equities at Toronto-based CIBC Asset Management Inc. "Obviously, analysts underestimated the growth in revenues two years out."

Another example is  Amazon.com Inc. (AMZN), the online retail giant. For the past decade its revenue growth has been growing at around 20%, but lately growth has accelerated to around 35%. "There is a long runway for growth for these types of companies," says Carlin, who works within a team that includes Canadian equities analyst Jonathan Mzengeza and senior analyst Michal Marszal. "The growth driver for Amazon has been a relatively new business, AWS, which is in the cloud sector."

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Amazon.com Inc3,452.68 USD1.10Rating
Apple Inc131.57 USD1.09Rating
Applied Materials Inc137.05 USD0.05Rating
Kinaxis Inc153.59 CAD3.53
Microsoft Corp259.95 USD1.00Rating
Shopify Inc A1,767.56 CAD5.81Rating

About Author

Michael Ryval

Michael Ryval  Michael Ryval, a regular contributor to Morningstar, is a Toronto-based freelance writer who specializes in business and investing.

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