In recent weeks, technology stocks have faced significant pressure due to concerns about inflation and the ramifications of restrictive monetary policies. A higher-than-expected consumer price index, with a 3.7% year-over-year increase, as reported by the U.S. Labor Department, has raised concerns. The Federal Reserve intends to continue its restrictive monetary policy until inflation aligns with its 2% target. This fear of monetary policies hampering global growth and potentially causing a recession has led to a sell-off in technology stocks. However, for astute long-term investors, this market pullback has created excellent buying opportunities. Here are three TSX tech stocks worth considering:
- WELL Health Technologies (TSX: WELL):
WELL Health Technologies is a tech-enabled healthcare company that empowers practitioners to provide omnichannel services to their patients. Despite a recent correction of over 16% since September, the company has delivered a remarkable 39% growth this year. Several strategic moves make this TSX WELL an appealing choice for investors. It recently acquired the clinical assets of HEALWELL AI in Ontario, establishing a strategic partnership to develop AI-enabled tools and technologies for healthcare providers. This partnership led to the launch of WELL AI Decision Support, facilitating early diagnosis and preventive health measures. The increasing adoption of telehealthcare services further enhances its growth potential. Expansion across North America and the introduction of innovative products are expected to bolster the company's financial growth.
- Docebo (TSX: DCBO):
Docebo, another technology stock, has experienced a 7% decline since the beginning of September. However, its year-to-date performance reflects a substantial 22.3% gain. The company posted an impressive second-quarter performance in August, marked by a 25% revenue growth. The addition of 485 customers over the past four quarters, along with an increase in the average contract value from $44,495 to $48,148, has driven sales. Significantly, its adjusted net income improved to $4.7 million, a noteworthy contrast to the adjusted net loss of $0.7 million in the previous year's quarter. The company generated an adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $3.1 million and free cash flows of $7 million. Furthermore, the e-learning market is expanding with increased adoption. Several strategic moves, such as acquiring Edugo and Peerboard and introducing new innovative tools, position TSX DCBO for robust financial performance. Given its discounted stock price and promising growth prospects, Docebo is expected to outperform over the next three years.
- Shopify (TSX: SHOP):
Despite experiencing a 20% decline in stock value since August 31, Shopify has delivered strong returns this year, surpassing 53%. The company continues to demonstrate robust performance, with a 31% growth in revenue. In the most recent quarter, it reported an adjusted operating income of $146 million, equivalent to 9% of its revenue, a notable improvement compared to the loss of $42 million in the previous year's quarter. TSX SHOP is actively introducing AI-enabled features across its platforms, aiming to enhance productivity for its customers. As online shopping continues to expand, Shopify is well-positioned to benefit from this growth. Considering these factors, it is expected that Shopify will deliver superior returns over the next three years.
In the face of recent market challenges, these three technology stocks present compelling opportunities for long-term investors. While the fear of inflation and restrictive monetary policies has led to a technology stock sell-off, these companies offer substantial growth potential and have demonstrated resilience. Well-positioned for the future, these stocks are worth considering for investors looking beyond short-term fluctuations.