- The TSX information technology (IT) index lost nearly 35 per cent in 2022
- Open Text announced signing an agreement to buy Micro Focus International plc on Thursday, August 25,
- Absolute Software stock gained roughly 43 per cent quarter-to-date
Investors seeking significant growth exposure can focus on technology stocks like Open Text (TSX: OTEX), Telus International (TSX: TIXT), Nuvei (TSX: NVEI) etc., for trying to get returns in the future.
After facing pandemic-induced supply chain worries, the global tech space continues to feel added pressure from widespread macroeconomic stress arising from geopolitical chaos and rising inflation rate. These economic concerns seem to be affecting investment sentiments worldwide, fueling the tech meltdown. In Canada, the TSX information technology (IT) index has lost nearly 35 per cent this year.
However, long-term investors with high-risk abilities can add quality technology stocks amid the current environment due to growth prospects. Keeping these things in mind, Kalkine Media® has picked the following five TSX-listed IT stocks that risk takers can explore for the long-term game.
1. Open Text Corporation (TSX: OTEX)
Open Text stated that its total revenues reached US$ 3.49 billion in fiscal 2022, a 3.2 per cent growth from US$ 3.38 billion last year, mainly helped by a year-over-year (YoY) growth of 9.1 per cent in cloud service and subscription revenues.
Cloud service and subscription revenues jumped by 14.3 per cent YoY to US$ 411.6 million in Q4 2022. However, this increase was offset by a 28.6 per cent decline in license revenue and a 1.8 per cent decrease in customer support revenue in the latest quarter compared to the fourth quarter last year. As a result, Open Text posted US$ 902.5 million in total revenues in Q2 2022, an increase of one per cent from Q4 2021.
On Thursday, August 25, Open Text signed an agreement to buy Micro Focus International plc to accelerate digital transformation efforts. Under this takeover agreement, Open Text is said to acquire all issued and to be issued shares of Micro Focus via its 100 per cent owned subsidiary, OpenText UK Holding Limited (Bidco).
Open Text stock dipped by nearly 20 per cent year-to-date (YTD). The OTEX stock was up by over five per cent from a 52-week low of C$ 45.8 clocked on May 12. As per Refinitiv data on August 25, the OTEX stock recorded a Relative Strength Index (RSI) value of 38.37 (marginally up from the oversold level of 30) and seemed to be on a bearish trend.
2. Absolute Software Corporation (TSX: ABST)
Absolute Software posted a top line of US$ 52.5 million in Q4 2022, reflecting YoY growth of 65 per cent. This double-digit rise in total revenue was largely helped by the cloud and subscription services segment, which reported a revenue surge of 67 per cent YoY to US$ 50 million in the latest quarter.
The small-cap tech firm also posted other revenues of US$ 1.5 million in Q4 2022, high from US$ 0.9 million in the same quarter a year ago. However, Absolute expanded its net loss to US$ 5.3 million in the latest quarter compared to a negative balance of US$ 3 million in the previous year’s fourth quarter.
Absolute Software stock gained roughly 43 per cent quarter-to-date (QTD). The small-cap scrip clocked a 52-week high of C$ 15.9 on August 24. As per Refinitiv data, the ABST scrip appears to be on a bull run with an RSI value of 76.54 on August 25, representing a high momentum.
©Kalkine Media®; ©Garis Studio via Canva.com
3. Nuvei Corporation (TSX: NVEI)
Nuvei’s revenue amounted to US$ 211.3 million in Q2 2022, marking a decrease of 19 per cent from the previous year’s second quarter. The payment tech solution provider also saw its profitability decline as its net income was US$ 35.1 million in the latest quarter (down from US$ 38.9 million a year ago) as share-based payments to employees surged by US$ 27.7 million as a result of the acquisition.
Nuvei stock shot up by almost eight per cent in one month. As per Refinitiv, the NVEI stock recorded an RSI value of 45.71 on August 25.
4. TELUS International (Cda) Inc (TSX: TIXT)
TELUS International saw its revenue at US$ 624 million in Q2 2022, up by US$ 91 million or 17 per cent from Q2 2021. The C$ 10 billion market cap tech company said this revenue surge was primarily driven by current and new client business surges, especially in its content moderation and artificial intelligence (AI) data services. The large-cap tech company posted a net income of US$ 56 million in the latest quarter, higher than US$ 16 million in the second quarter of 2021. Further ahead, Telus International expects revenue growth of 16.2 per cent to 18.5 per cent in fiscal 2022 (on a reported basis).
Telus International stock surged by roughly 29 per cent in six months. According to Refinitiv, the TIXT stock seems to be on a medium-to-high momentum as its RSI was 66.25 on August 25.
5. Docebo Inc (TSX: DCBO)
Docebo reported a revenue of US$ 34.93 million in the second quarter of fiscal 2022 relative to US$ 25.63 million in the last year’s second quarter. Subscription revenue amounted to US$ 31.91 million in the latest quarter, reflecting a YoY increase of 35 per cent. Professional services revenue jumped by 52 per cent to reach US$ 3.02 million in Q2 2022 from US$ 1.98 million in Q2 2021.
Docebo stock zoomed by over 11 per cent QTD. According to Refinitiv information, the DCBO stock appears to be on a moderate trend, with an RSI value of 47.2 on August 25.
The TSX technology index gained by about eight per cent QTD. Investors focused on high growth can explore the tech stocks discussed above. Open Text and Absolute Software also dole out a dividend to shareholders every quarter, which could be an additional factor in exploring these tech stocks for the long term.
Please note, the above content constitutes a very preliminary observation based on the industry, and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.