Kalkine Media lists Canadian tech stocks to watch as sector rebounds

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 Kalkine Media lists Canadian tech stocks to watch as sector rebounds
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Highlights

  • On June 6, 2022, Descartes Systems Group Inc. announced its acquisition of XPS Technologies.
  • In Q2, 2022, the revenue for Constellation Software Inc. grew by 30 per cent.
  • In Q1 2023, the total revenue for Lightspeed was noted at US$ 173.9 million.

The tech sector accounts for 5.57 per cent of the TSX index and S&P/TSX Information Technology Index has witnessed a QTD (quarter-to-date) increase of 9.61 per cent. There are several market aspects that contribute to the functioning of the market. The factors are time-dependent and may vary in different time periods. A few of them include interest rates, macroeconomic conditions, updates in government policies, etc.

During times of slow growth, tech stocks remain in a safe space. Timing is an essential factor when considering investing. If investments are made keeping the time factor in mind, they can be favorable to the investor. This way, people can beat market hiccups and wade through all the uncertainties.

Here are five tech stocks along with their recent financial performances to analyze and assess for the long-term:

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

The Descartes Systems Group is a technological firm that that operates in the shipping industry and offers software solutions to its clients. It helps the users in their communication process and makes it easier. The core product of the company operates by the name- Global Logistics Network (GLN) and is transaction driven. The company charges its clients for sending and receiving messages, documents, and data on its brand GLN.

In Q2 for fiscal 2023, Descartes Systems Group reported its revenue at US$ 123 million, which is up by 18 per cent from US$ 104.6 million in the year-ago quarter. The net income was reported at US$ 22.9 million compared to US$ 23.2 million for the same comparative period in 2022. The company's stock overall witnessed a QTD increase of 6.44 per cent.

The adjusted EBITDA of the company was US$ 54 million which was an increase of 18 per cent from US$ 45.9 million. Currently, the EPS (earnings per share) is reported at C$ 1.38 and the P/E (price-to-earnings) ratio was at 68.

On June 6, 2022, Descartes stated its acquisition of XPS Technologies.

  1. Constellation Software Inc. (TSX: CSU)

Constellation Software Inc offers services to private and public sector markets. It also develops and customizes software. Further, the company deals in vertical-specific businesses and is into managing, acquiring and building them.

In Q2 2022, the net income rose by 43 per cent to US$ 126 million compared to US$ 88 million in Q2 2021. The revenue for Constellation Software Inc. also grew by 30 per cent to US$ 1,618 million compared to US$ 1,249 million for the same comparative period a year ago.

On May 2, 2022, the company announced its acquisition of Allscripts Hospitals and Large Physician Practices Business Segment. The below graph shows the changes in the total assets and liabilities of Constellation Software in two time periods.

  1. Kinaxis Inc. (TSX: KXS)

Kinaxis Inc is a software solutions provider based in Canada. The company is also involved in the operations planning (S&OP) and supply chain management for different firms. RapidResponse product is the core and flagship product of the company that is provided on the cloud. Moreover, it is engaged into high-speed analytics, alerting and evaluation, responsibility-based collaboration, and scenario simulation.

In Q2 2022, the SaaS revenue of Kinaxis grew by 21 per cent to US$ 51.1 million compared to US$ 42.3 million in the year-ago quarter. The total revenue also rose by 35 per cent and was reported at 80.8 million compared to US$ 60.05 million for the same comparative period. The company reported gross profits of US$ 49.77 million in the reported quarter.

The adjusted EBITDA rose by 45 per cent at US$ 10.37 million versus US$ 7.14 million. On August 16, 2022, the company made an announcement for its acquisition of MPO.

  1. Lightspeed Commerce Inc. (TSX: LSPD)

Lightspeed Commerce is a SaaS platform that is engaged in providing provides omni-channel commerce. The company engages with customers with the right functionality of its software platform. Further, it manages operations for its business growth along with accepting payments.  

In Q1 of fiscal 2023, the total revenue for Lightspeed Commerce Inc. was noted at US$ 173.9 million which was an increase of 50 per cent from the period ended on June 30, 2021.

As of June 30, 2022, the cash and cash equivalents were reported at US$ 914.78 million.

  1. Nuvei Corporation (TSX: NVEI)

Nuvei Corp is a technology firm that provides payment solutions to its partners and different merchants. The company solutions offered are in the form of online and mobile payments. Nuvei operates in the areas of Asia Pacific, Europe, North America, and Latin America.

As of June 30, 2022, the net income witnessed a decline and was reported at US$ 35.08 million compared to US$ 38.91 million in the year-ago quarter. The cash flow from operating activities grew to US$ 157.22 million from US$ 138.99 million. The revenue also rose to US$ 146.5 million compared to US$ 95.87 million.

Bottom Line:

Every economy is affected by uncertainties and other factors. But to overcome these ups and downs is what defines the stability of the stocks. For tech stocks, the investors may follow a long-term approach. Another important aspect is of diversification that can be implemented while repositioning your portfolio.

You may choose a mix of small cap, medium cap, or large cap to obtain the desired value of your portfolio. With a diversified range, it becomes easy for the investors to be in sync with their investment goals.

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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