With the market seemingly hitting new all-time highs every day, the value investors in us are getting bored. There just don't appear to be many good values out there, and we're passing the time by putting together a wish list of stocks we can't wait to buy when they go on sale. Topping our lists are Shopify (NYSE: SHOP), Ritchie Bros. Auctioneers (NYSE: RBA), and Retail Opportunity Investments (NASDAQ: ROIC), which all, oddly enough, have something to do with shopping.
Can't wait to shop for Shopify on sale
Alas, I wasn't allowed to -- and the stock ended up rising 8% on the day. But just because I missed my opportunity doesn't mean I won't be waiting for the next opportunity to buy this stock on sale.
Shopify provides a platform for businesses of all sizes to establish an online presence. The company benefits from incredible growth rates and high switching costs: Vendors would be loath to switch online providers when all of their information and personalized e-commerce solutions are in a single space with Shopify.
Of course, the big problem is that the market has taken notice of Shopify's growth. The stock has tripled over the past year -- and is yet to be profitable. That adds a measure of risk. I, however, think management's decision to aggressively reinvest in the company's platform is a great long-term decision. I'm willing to consider buying a little at today's prices -- which means I can't wait for shares to go on sale.
Waiting for this auctioneer to go on sale
Ritchie Bros. operates in a highly fractured industry. Despite being the clear leader, it still generates roughly less than 5% of the industry's estimated total auction proceeds. But that gives it two distinct advantages: the ability to be picky with acquisitions, and network effect.
Because it has the size and scale that few can match, and because of the fractured nature of its industry, Ritchie Bros.' management can simply select the best acquisitions for its business. That's exactly what it did with last year's acquisition of IronPlanet, its premier online competitor.
The acquisition was a no-brainer, and as the companies combine, Ritchie Bros.' network effect will improve, by being able to reach more buyers and sellers online -- which was the sole focus of IronPlanet's business. Reaching more buyers is of great interest to sellers, of course, and as more sellers are looking to Ritchie Bros. because of its expanding reach, it lures in more consumers looking for more heavy-equipment options during auctions. In short, it's a virtuous cycle.
The online strategy is gaining traction -- see for yourself the drastic improvement in online sales as a percentage of total sales:
Mining asset pricing has done better in recent months than in the past four years, and oil and gas companies are growing more optimistic in North America because of pipeline approvals -- and having both of those sectors improving bodes well for Ritchie Bros. Now if only its stock would go on sale again.
Some pricey retail real estate
That business model has worked out quite well -- too well, in fact. While I can't complain that my shares are up more than 30% since I bought them about two and a half years ago, I had hoped to be able to add to my investment over time. However, the shares are just too pricey right now. The Motley Fool's own Inside Value and Income Investor services agree that the stock is overvalued and should trade closer to $20 per share. At $22 today, I tend to agree that it's overvalued, especially now that the yield is down to 3.4%, which just isn't as appealing as what other REITs offer.
I would seriously consider adding to my position should the yield trade closer to 4% as a result of a sell-off in the stock price. That could happen if the market decides it's done running higher or if REITs take a dive on interest-rate worries. That's why I plan to bide my time and wait for this shopping-center REIT to go on sale.
10 stocks we like better than Shopify
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