5 TSX tech stocks to watch after market rebound

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 5 TSX tech stocks to watch after market rebound
Image source: © Pichitbo | Megapixl.com

Highlights

  • For Q2 2022, revenue for Constellation Software Inc. grew by 30 per cent to US$ 1.6 billion.
  • On July 8, 2022, Shopify Inc. announced completing its acquisition of Deliverr, Inc.
  • As of June 30, 2022, the revenue for Nuvei Corporation grew to US$ 211.29.

The technology sector is one of the most dynamic and accounts for 5.36 per cent of the S&P/TSX Composite Index. Reportedly, the technology stocks have led to a market rebound and are gaining strength lately.

As of October 26, 2022, the sector grew by 4.51 per cent quarter-to-date (QTD). In the recent past, there have been many economic concerns such as high-interest rates, the Ukraine crisis, rising inflation, and interest rate hikes.

Despite this pressure, technology stocks grew faster in comparison to the overall market. The ever-changing technology and its applications along with the competitive edge may be the reason behind this.

Investors should sync goals with their portfolios for gains in the long run. Let's explore five tech stocks and their recent financials:

  1. Constellation Software Inc. (TSX: CSU)

Constellation Software Inc. is a software company based in Canada. It is engaged in developing and customizing software catering to private and public sector markets. Its portfolio companies serve several markets including hospitality, beverage distribution, auto clubs, communications, credit unions, textiles, and apparel.

For the second quarter of 2022, the revenue for Constellation Software Inc. grew by 30 per cent to US$ 1.618 billion as compared to US$ 1.249 billion for the same quarter the previous year.

Further, its net income grew by 43 per cent and was noted at US$ 126 million as against US$ 88 million for the same comparative period.

As of June 30, 2022, the assets for the company rose to US$ 7.4 billion from US$ 5.766 billion as on December 31, 2021. Constellation Software pays a quarterly dividend of US$ 1. The company reported a three-year dividend growth of 6.79 per cent.

On May 2, 2022, the N. Harris Computer Corporation (wholly owned subsidiary of Constellation Software Inc.) announced the completion of its acquisition of Allscripts’ Hospitals and Large Physician Practices business segment from Allscripts Healthcare Solutions.

  1. Shopify Inc. (TSX: SHOP)

Shopify Inc. caters to small and medium sized businesses by offering them an e-commerce platform. The company has a total market capitalization of US$ 51.6 billion and operates under two segments-subscription solutions and merchant solutions.

As of June 30, 2022, Shopify’s revenue witnessed a rise and was reported at US$ 1,295.06 million as against US$ 1,119.44 million on the same time of the previous year. The gross profit also rose to US$ 655.64 million as compared to US$ 620.86 million for the same comparative period. The cash and cash equivalents also increased to US$ 3,350.78 million in the reported quarter.

On July 8, 2022, Shopify Inc. announced completing its acquisition of Deliverr, Inc.

  1. CGI Inc. (TSX: GIB.A)

CGI Inc. is an IT-services provider based in Canada and has a significant presence in Europe and North America. The company offers a wide range of products under its portfolio that includes BPS (business process services), systems integration, consulting, and application maintenance. Major revenue for the company is contributed by its government vertical which accounts for more than one-third of the total amount.

For Q3 2022, CGI Inc. generated revenue of C$ 3.26 billion which was a year on year (YoY) increase of 7.9 per cent. The net earnings too witnessed an increase, which was reported at C$ 364.3 million from C$ 338.5 million for Q3 2021.

The adjusted EBIT (earnings before interest and taxes) was posted at C$ 519.9 million which is an increase from C$ 476.8 million for the same comparative period. The earnings per share (EPS) for the company is C$ 6.01 with a P/E (price-to-earnings) ratio of 18.  

  1. Descartes Systems Group Inc. (The) (TSX: DSG)

The Descartes Systems Group is a software solution provider catering to the shipping industry that facilitates the users to communicate with one another. Global Logistics Network (GLN) is the core product of the company and is understood as transaction driven. The company charges its clients to receive/send documents, data, and messages on the GLN (the transactions).

For Q2 2023, the revenue of Descartes Systems was reported at US$ 123 million, up by six per cent from US$ 116.4 million in Q1 2023.

The adjusted EBITDA also increased to US$ 54 million from US$ 51.2 million. On the contrary, there was a decrease in the net income which was noted at US$ 22.9 million compared to US$ 23.1 million in the year-ago quarter.

The graph below depicts the cash for the Descartes Systems Group Inc. at the end of two different periods.

  1. Nuvei Corporation (TSX: NVEI)

Nuvei Corporation is a provider of payment technology solutions. The company offers solutions to its partners and merchants in the form of online payments, mobile payments, and In-store payments. Nuvei Corporation operates in the Middle East, Latin America, the Asia Pacific, North America, and Europe.

The Q2 2022 revenue of Nuvei Corporation was reported at US$ 211.29 million up from US$ 178.23 million in the year-ago quarter. Conversely, there was a decrease in the net income which was noted at US$ 35.08 million as against US$ 38.91 million for the same comparative period.

The cash flow from operating activities for Nuvei Corporation also witnessed an increase to US$ 157.22 million from US$ 138.99 million from the same comparative period.

Bottom Line:

Although the market environment may be uncertain and fluctuating, technology sector can be an option to explore if you are moving ahead with the long-term approach.

To stay on top of your portfolio, it is crucial to stay updated with the latest market trends and updates. With the right direction, you may invest in stocks that have potential to grow. Your portfolio reflects your financial goals. Hence, diversify your goals and minimize the risk involved in your investment.

Also, while selecting your stocks, do not limit yourself. Be vigilant to crucial factors and assess them.

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.

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