Kalkine Media explores 5 TSX Tech stocks to watch in December

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 Kalkine Media explores 5 TSX Tech stocks to watch in December
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Highlights

  • In Q3 2022, Constellation Software’s revenue was US$ 79 million.
  • Magnet’s adjusted EBITDA in Q3 2022 was US$ 5.86 million.
  • Docebo’s net income was reported at US$ 10.3 million in Q3 2022.

 

Presently, the stock market, including the technology sector, is weighed down by inflationary pressures and rising interest rates. So, an improvement in the macro environment may bring relief to the sector and overall market.

The technology sector accounts for 5.5 per cent of the S&P/TSX Composite Index. As of November 25, 2022, the sector grew by 12.018 per cent quarter-to-date (QTD).

Investors with long-term goals may explore the sector and choose their stocks according to their portfolio needs. Sync your goal with your portfolio to not lose your hard-earned money.

As an investor, move ahead with a long-term approach as it will balance out your portfolio. Inflation may be daunting for an investor but with the right approach, threats may be converted into opportunities.

It may be difficult to avoid the risks while in the market. Hence, working on the risk mitigation strategy should be on the checklist of every investor. Before your stock selection, analyze the risk surrounding your portfolio and take measures accordingly.

Here are five tech stocks to look at as we assess their recent financial highlights:

  1. Constellation Software Inc. (TSX: CSU)

Constellation Software Inc. is engaged in software development and customization. The company is based in Canada and caters to public and private sector markets. Additionally, Constellation Software builds vertical-specific businesses and serves tour operators, credit unions, communications, auto clubs, and community care.

In Q3 2022, Constellation Software’s revenue increased to US$ 1725 million from US$ 1,299 million in Q3 2021. The company’s net income rose to US$ 143 million from US$ 121 million for the same comparable period. Constellation’s net cash flow from operating activities jumped to US$ 321 million from US$ 292 million. Constellation Software’s total assets witnessed an increase and were reported at US$ 7,325 million versus US$ 5,434 million for the reported quarter.

With a total market capitalization of US$ 44.09 billion, the company has an EPS of US$ 29.68. It distributes a quarterly dividend of US$ one and the dividend yield was reported at 0.264 per cent.

  1. Magnet Forensics Inc. (TSX: MAGT)

Magnet Forensics Inc. develops digital investigation software. It is engaged in analyzing, acquiring, and managing evidence from digital sources including cloud services, mobile devices, computers, and IoT devices.

Magnet Forensics’ revenue in Q3 2022, grew to US$ 24.99 million from US$ 17.77 million in the year-ago quarter. The adjusted EBITDA rose to US$ 5.86 million from US$ 4.69 million for the same comparative period.

Magnet’s total assets increased to US$ 171.32 million from US$ 161.97 million. Meanwhile, the liabilities also increased to US$ 76.12 million from US$ 72.83 million for the reported quarter. The company’s gross profit jumped to US$ 23.31 million from US$ 16.44 million.

On May 5, 2022, Magnet Forensics acquired Comae Technologies’ strategic IP assets.

Market capitalization of CSU, MAGT, SHOP, KXS, and DCBO:

  1. Shopify Inc. (TSX: SHOP)

Shopify Inc. is an e-commerce platform with two segments-merchant solutions and subscription solutions. The former allows the company's merchants to conduct e-commerce on the company's website and other platforms. The latter segment facilitates Shopify shipping, payments, and capital.

Shopify’s gross profit in Q3 2021 was reported at US$ 662.33 million compared to US$ 608.9 million. The company reported a net loss of US$ 158.4 million compared to a net income of US$ 1,148.43 million for the same comparable period. The revenue jumped to US$ 376.3 million from US$ 336.2 million. The cash and cash equivalents declined to US$ 1,378.25 million.

  1. Kinaxis Inc. (TSX: KXS)

Kinaxis Inc. provides software solutions for supply chain management, operations planning, and sales planning.  

In Q3 2022, Kinaxis’ revenue grew to US$ 89.49 million from US$ 64.43 million in Q3 2021. Meanwhile, the adjusted EBITDA rose to US$ 14.8 million from US$ 12.38 million for the same comparative period. Kinaxis’ total non-current assets soared to US$ 569.14 million from US$ 520.26 million. The company’s gross profit increased to US$ 55.1 million from US$ 42.58 million for the reported quarter.

Kinaxis announced that it acquired MPO on August 16, 2022.

  1. Docebo Inc. (TSX: DCBO)

Docebo Inc. is engaged in providing enterprise learning (external and internal) with time optimization, real-time tracking of training results, and cost reduction related to learning methods. It carries out operations in North America, Asia, and Europe.

In Q3 2022, Docebo’s revenue rose to US$ 37 million and witnessed an increase of 37 per cent from the same quarter of the previous year. The Net income grew to US$ 10.3 million from US$ 0.7 million for the same comparative period.

The company’s gross profit increased by 39 per cent and was reported at US$ 29.8 million. The adjusted EBITDA income was posted at US$ 0.6 million versus a loss of US$ two million for the reported quarter.

Bottom Line

Although the many sectors may be under inflationary pressures, investors can still choose to invest with a long-term strategy. Growth and risk mitigation are vital aspects of an investor’s portfolio. Both can be catered to by the diversification element. It helps the investor in spreading out the risk.

While operating in the market, make sure to widen your selection horizon and back it up with thorough research.

 

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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