Kalkine Media lists TSX tech stocks to watch for long-term

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Kalkine Media lists TSX tech stocks to watch for long-term

 Kalkine Media lists TSX tech stocks to watch for long-term
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Highlights

  • As of September 15, 2022, the tech sector was down by 38.054 per cent year-to-date (YTD).
  • The TSX tech stocks faced a correction in the years 2021 and 2022.
  • With higher interest rates, the companies are bound to borrow more money, thereby increasing the costs.

The TSX tech stocks sector accounts for 24 per cent of the index, the second largest sector in Canada. The TSX tech stocks faced a correction in the years 2021 and 2022. Speculation about higher interest rates is one of the reasons behind this.

With higher interest rates, the companies are bound to borrow more money, thereby increasing the costs. This, in turn, increases the weighted average capital costs and reduces the amount paid to the company. This holds in the case of the technology sector as it shows fast growth.

As of September 15, 2022, the sector was down by 38.054 per cent year-to-date (YTD) and grew by 2.92 per cent quarter-to-date (QTD).

Here, we explore five tech stocks curated by Kalkine Media® and evaluate their recent performances:

Descartes Systems (TSX: DSG)

The Descartes Systems Group is a software solution-based company that helps users communicate with the shipping industry. The company offers Global Logistics Network as its core product.

As of September 15, 2022, the total market capitalization of Descartes was C$ 7.8 billion. Its 52-week trading range is C$ 72.94 – C$ 115.29. The earnings-per-share (EPS) offered by the company is 1.38, and the return on equity is 9.72 per cent.

The graph below depicts the changes in Descartes Systems' financials of Q2 2021 and Q2 2022.

Open Text Corporation (TSX: OTEX)

Open Text offers software for clients to track their unstructured information, including presentations, documents, and emails. It also facilitates aggregating, archiving, searching, and retrieving information.

The total market capitalization for OTEX is C$ 10.6 billion. The dividend growth for the company in the past five years (2018-2022) has been 12.24 per cent.

Currently, the dividend offered by the company is US$ 0.243. There has been a slight increase in the current dividend offered compared to US$ 0.221, which was reported on September 02, 2021. The EPS for OTEX is currently 1.88, and the P/E ratio is 21. 

Constellation Software (TSX: CSU)

Constellation Software Inc. is involved in developing and customizing software for its clients. These clients include both private and public sector markets. The company is currently offering a dividend of US$ 1 on a quarterly basis.

The dividend growth for the past five years has been reported at 2.83 per cent. Constellation software is currently operating with a total market capitalization of 42.091 billion.

In December 2021, the company reported a gross profit of US$ 1,986.22 and saw an upward trend compared to December 2020.

Kinaxis (TSX: KXS)

Kinaxis Inc. is a software solutions provider for sales and operations planning (S&OP) and supply chain management. Kinaxis offers RapidResponse on the cloud, which is its flagship product.

The total market capitalization of Kinaxis is C$ 3.964 billion, including listed and unlisted. Kinaxis’ total revenue surged by 35 per cent YoY in Q2 2022.

Hence, there was an increase in the gross profit too by 24 per cent during the same period.

Shopify (TSX: SHOP)

Shopify is an e-commerce platform with two segments: subscription solutions and merchant solutions.

The subscription solutions segment facilitates the Shopify merchants to conduct e-commerce on several platforms, including the company's website, Amazon, kiosks, physical stores, social networks (Facebook), and pop-up stores.

The merchant solutions facilitate e-commerce and include Shopify Payments, Shipping, and Capital. The company has a market capitalization of US$ 52.5 billion.

Bottom Line

If you are in the right environment, you can pick your tech stocks as per your understanding. However, 2022 has been an uncertain year.

Even if a company showcases no profits, it typically trades at high price multiples. On the other side, with rising interest rates, there can be a slash in future revenue generation. It is crucial to diversify your stocks even within the tech industry.

It is vital to stay updated with the latest news and trends and follow fluctuating patterns.

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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