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Summary
- Tech stocks are up amid the second phase of lockdown in Canada.
- The S&P/TSX Capped Information Technology Index is already up 58 per cent this year, guided by Shopify’s unprecedented stock performance.
- Shopify stocks have increased 24 per cent in the last one month. Units of the tech giant have skyrocketed 174 per cent in 2020.
- Constellation and Lightspeed stocks also rallied this year, ranking among TMX’s top price performers.
Canada is celebrating this festival session indoors amidst the second phase of COVID-19-led lockdown. The federal government has asked citizens to avert any non-essential travel abroad following the emergence of the new COVID-19 mutant strain.
In the first phase of lockdown, people relied on technology to carry on their day-to-day work. Consequently, tech stocks rallied. As parts of Canada once again entered lockdown, tech stocks are surging again amid social distancing and travel restrictions.
The S&P/TSX Capped Information Technology Index has returned nearly 6 per cent month-to-date, led by rising tech stocks such as Shopify Inc. (TSX:SHOP), Constellation Software Inc (TSX:CSU), and Lightspeed POS Inc. (TSX:LSPD).
Shopify has been providing an e-commerce platform to millions of vendors and buyers during these hard times. Its stocks hit an all-time high stock price this year. Constellation Software, which develops customized software for public and private enterprises, also hit its all-time stock price high. Similarly, SaaS-enabled platform Lightspeed, which provides cloud-based solutions to e-commerce companies for hassle-free online shopping, is currently trading at its peak price.
Surging Canadian Tech Industry
The TSX tech index has soared over 58 per cent in 2020, guided by a unanimous demand for tech products amid the COVID-19 outbreak. In its quarter-to-date performance, the index has added nearly 12.5 per cent growth.
Shopify has added the maximum price volume to the industry with a massive 174 per cent year-to-date (YTD) rise. It is currently the biggest company on the entire Toronto Stock Exchange (TSX) based on market cap. This stock has rallied over 24 per cent in the last one month, almost a 2x performance vis-à-vis the benchmark index. Shopify stocks are a part of TMX’s top tech and top price performers – both lists stocks that have outperformed the market (TSX and TSXV) with the highest price gains in the last 30 days.
Constellation and Lightspeed also rank among TMX’s top tech and top price performers, driven by their last one-month stock performances.
Constellation stocks are up by three per cent quarter-to-date, and the software company is delivering a quarterly cash dividend of US$ 1 per unit. Stocks of the software developer have yielded nearly 32 per cent returns this year.
LSPD stocks have speeded up by approximately 42 per cent month-to-date. Units of the SaaS-based company have zoomed over 144 per cent year-to-date.
Tech Debutante Stock Of 2020
Nuvei Corporation (TSX:NVEI) stock is up by over 33 per cent month-to-date. The rise is party fueled by demand of fintech platforms and the ongoing crypto rally. Shares of the payment technology solution provider have swelled 65 per cent since its listing in September. This mid-cap company has also been placed among TMX’s tech performers. The stock has a price-to-cashflow ratio of 171.70 and a price-to-book ratio of 6.923, as per the TMX portal.
Other tech debuts of 2020 include Dye & Durham (TSX:DND).
2021 Outlook
Tech stocks bull rally may slow down as the COVID-19 vaccine inoculation campaign gains pace across Canada. But a broad rise is likely to continue. This surge will partly be fueled by continuous digital disruptive technologies, expanding IT infrastructure and distancing norms that is paving the way for fintech and cryptocurrencies.
