Bet on Strong Consumer Spending

Since the election, markets have shifted back to rally mode. Optimism is back, as it’s likely that growing the economy will be the focus out of Washington for the next four years.

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  • If that’s the case, then stocks have more room to rally. And the big winners could be smaller players in their industry that benefit from higher growth and increased deregulation. Traders are already making their bets, but these plays have more room to rally.

    Given that consumers are getting more optimistic, consumer spending trends may increase. That could bode well for companies like Shopify (SHOP). The e-commerce retailer’s earnings showed a hefty jump in revenues compared to last year’s third quarter.

    With revenues up over 20% in the past year amid a challenging environment for retail sales, Shopify is well-positioned to offer investors better returns as consumer confidence comes roaring back. Given the company’s strong outlook for Q4, shares are likely to continue with their strong uptrend.

    Action to take: With shares jumping to new 52-week highs, Shopify is a strong momentum trade now. And investors could see shares take aim at their old all-time highs from late 2021 in the months ahead.

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  • For traders, the January 2025 $125 calls, last trading for about $3.65, could see mid-to-high double-digit returns on a further rally into next year.

     

    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.