Best Stock to Buy Right Now: Shopify vs Lightspeed?

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Written by Brian Paradza, CFA at The Motley Fool Canada
Canadian tech investors hunting for growth in June may find themselves weighing two prominent TSX stocks: the e-commerce giant Shopify (TSX:SHOP) and the beaten-down retail software specialist Lightspeed Commerce (TSX:LSPD). Both had their struggles, one has recovered substantially, and they offer distinct paths to potential returns. However, their risk profiles and current trajectories couldn't be more different. Let's break down which growth stock might be the better fit for your portfolio today.
Shopify isn't just an online store builder anymore; it has evolved into a global commerce operating system. Its latest quarterly results (Q1 2025) reinforced its strength: revenue surged 27% year-over-year to US$2.4 billion, gross merchandise volume (GMV) grew 23%, and its free cash flow margin hit a healthy 15%. Crucially, its Payments platform now operates in 39 countries after a massive expansion, achieving 64% penetration of its GMV.
Shopify's key advantage is its proven resilience and profitability. It generates significant, self-sustaining cash flow. Operating margins expanded to 14.8% over the past 12 months, up dramatically from 3.7% in 2023. Management emphasizes agility – reacting swiftly to challenges like new tariffs by rolling out features like localized buying filters and artificial intelligence (AI) powered duty calculators ('TariffGuide.ai') in days or weeks. This execution speed, combined with a diverse merchant base spanning tiny startups to well-established retail giants, provides stability.
However, quality comes at a price. Shopify stock trades at a forward price-to-earnings (P/E) ratio near 75 and a forward enterprise-value-to-earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) multiple of 67.3. You are paying handsomely for this premium growth and stability. While Shopify's growth rate is impressive (targeting mid-20% revenue growth for the second quarter), the large-cap stock's growth rate is naturally slowing from its hyper-growth past. Trade conflicts and economic slowdowns remain potential headwinds.
Lightspeed presents a stark contrast. Once a high-flyer, its stock sits at a painful 90% below its all-time highs. Investor sentiment remains low following past missteps and a major restructuring. Yet, here lies the potential opportunity.
The company is showing signs of a possible turnaround. Revenue growth, while slower than Shopify's, remains respectable at around 18% recently. Management is aggressively repurchasing shares, buying back over 12% of the outstanding stock in the past year at depressed prices – a strong signal it believes the stock is undervalued. Gross margins are expanding due to tighter cost controls and existing customers adopting more modules (increasing average revenue per user). Crucially, Lightspeed is inching towards free-cash-flow break-even and sustained profitability within the next one to two years.
Valuation is Lightspeed Commerce stock's compelling argument. Its forward P/E sits at a much cheaper 19.7, and its forward EV/EBITDA is 14.1 – far below Shopify's multiples. If Lightspeed successfully executes its restructuring, demonstrates clear sustainable profits, and rebuilds investor confidence, the stock could see a dramatic re-rating upwards. Triple-digit percentage gains aren't out of the question for patient investors if everything clicks.
The catch? Significant execution risk remains. The market is still in 'wait-and-see' mode. Lightspeed needs to consistently hit its targets, prove its restaurant and retail segments are solidly growing post-restructuring, and overcome the stigma attached to its name. It currently lacks Shopify's current cash flow safety net.
So, which is the better TSX tech stock to buy now? The answer hinges entirely on one's risk tolerance and investment horizon. Choose Shopify stock if you prioritize stability, proven profitability, strong cash flow, and market leadership, and you're comfortable paying a premium valuation for a company with a clear path to solid and profitable growth. Shopify is the 'sleep-easy' growth stock for the long haul. Otherwise, consider Lightspeed Commerce stock if you have a higher risk tolerance and seek deep value with explosive upside potential, and you believe management can deliver on profitability promises, reignite growth, and win back the market's favour.
Looking ahead, Shopify stock may offer a smoother ride on a well-paved highway. Lightspeed offers a potentially thrilling, but much bumpier, path through uncharted territory. For most investors seeking reliable growth in the Canadian tech sector today, Shopify's combination of execution, profitability, and resilience makes it the stronger, albeit pricier, choice. Lightspeed is a fascinating speculative bet for those willing to embrace its higher risk in hopes of a spectacular rebound. Carefully weigh where you fall on that spectrum before hitting the buy button.
The post Best Stock to Buy Right Now: Shopify vs Lightspeed? appeared first on The Motley Fool Canada.
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Fool contributor Brian Paradza has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Shopify. The Motley Fool recommends Lightspeed Commerce. The Motley Fool has a disclosure policy.
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