The Motley Fool

These 2 Canadian Tech Titans Could Be the Next Shopify (TSX:SHOP)!

Kinaxis (TSX:KXS) and Descartes Systems Group (TSX:DSG)(NASDAQ:DSGX) are two promising mid-cap tech companies that could join the ranks of Shopify at some point over the next five years and beyond. Coincidentally, both companies create SaaS (software as a service) solutions aimed at improving supply chain management.

As you may know, SaaS is a booming field in the world of technology. If you’re interested in investing in this hot field, both Descartes and Kinaxis have you covered, and, best of all, you won’t need to swap out your loonies for greenbacks for a U.S. stock.

Descartes is a provider of SaaS logistics solutions aimed at enhancing business security, the supply chain, transportation, and logistics capabilities. The company has been active on the acquisition front, like so many other big-name SaaS players in the U.S.

Further, Descartes also deals with shipments moving across the border. As e-commerce continues to pick up traction, one can only expect cross-border shipments to surge, and Descartes will be a significant beneficiary. Cross-border shipments can be a real pain in the neck, and that’s where Descartes shines.

Fellow Fool contributor Mat Litalien did a good job of describing the business in detail in his piece. The most promising takeaway was, Descartes Systems is poised to enjoy high double-digit CAGR numbers over the next five years (and possibly beyond).

Kinaxis is another SaaS firm in the supply chain management arena. The company saw its operating cash flows surge 23% year over year for the second quarter, and, like Descartes, Kinaxis is just getting started. Kinaxis is a global player with a promising European segment that experienced explosive revenue growth numbers that put its Canadian business to shame. Moving forward, if Kinaxis can improve the results domestically, I have no doubt the stock could take off like a coiled spring.

Foolish takeaway

What’s the next Shopify?

Both Kinaxis and Descartes are top contenders, and, of course, Shopify itself could still have plenty of room to run if you’ve got a long-term time horizon. If either Descartes or Kinaxis entices you, I’d stick with one name to avoid potential overlap. At these levels, I’d go with Descartes because it has a more robust operating cash flow stream.

Stay hungry. Stay Foolish.

Just Released! 5 Stocks Under $49 (FREE REPORT)

Motley Fool Canada's market-beating team has just released a brand-new FREE report revealing 5 "dirt cheap" stocks that you can buy today for under $49 a share.
Our team thinks these 5 stocks are critically undervalued, but more importantly, could potentially make Canadian investors who act quickly a fortune.
Don't miss out! Simply click the link below to grab your free copy and discover all 5 of these stocks now.

Claim your FREE 5-stock report now!

Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool owns shares of Shopify. Kinaxis and Shopify are recommendations of Stock Advisor Canada.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.