Three sectors – Financials, Energy, and Materials – dominate the TSX, but the Technology sector is starting to boom. Over the last five years, however, the Technology Index has been outperforming the TSX, and there’s no stopping the acceleration.
Kinaxis is one among more than a dozen tech stocks that market analysts cover and follow. Despite the general weakness of the sector in 2019, however, this stock is showing gains of 53.7% year to date. Analysts covering KXS believe it could post the highest growth rate and expects a 19% CAGR in the next five years.
This $2.7 billion company is low key, yet it’s sparking investor interest. Its supply chain solutions are not only, trendy but also a vital need across various industries. Kinaxis peddle SaaS solutions for supply chain planning.
The software it provides to top-name customers serves as a control tower for their respective supply chains. These clients can perform scenario analysis using Kinaxis’ software.
The software can flag problems or bottlenecks so users can predict the impact on operations and make timely decisions.
Now that the entire software space is catching fire, Kinaxis should emerge a key player next year and beyond. There’s plenty of organic growth in the long term.
RapidResponse is Kinaxis’ crown jewel. This cloud-based subscription software is dedicated to supply chain management and operations.
As it’s a collection of cloud-based supply chain planning and sales and operations planning (S&OP) solutions, the functionality can be customized to a specific industry.
The company lands and expands its client base too because of the innovative software. Usually, contract values increase once customers get accustomed to using RapidResponse.
Kinaxis is doing a great job of growing at a pace that allows for profitability every year. About 80% of its revenue is recurring, while 65% of the revenue is subscription-based.
You can say that the company is still scratching the surface. Many companies, especially the big ones, are prospective clients.
Even in the new era of best practices for tariff and trade management, end-to-end planning is necessary. Kinaxis should emerge as a reliable company that can provide specialized global trade management software and processes. It would enable companies to become best-in-class organizations.
Next tech winner
Kinaxis is still expanding and working to assist clients worldwide. By using its digital technology for more sophisticated supply chains, companies can achieve supply chain efficiencies and respond immediately to business changes. Also, there will be a shorter time for planning, which would result in faster decision-making.
This tech stock’s performance over the last five years is nothing short of spectacular. The shares of Kinaxis grew by 452.5% during the period. Expect the company to help billion-dollar companies to transform their supply chains and realize dramatic results.
If you’re looking for a Canadian tech winner to include in your 2020 stock portfolio, consider Kinaxis. The company is growing at a decent clip and could outperform the market in the years ahead.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends KINAXIS INC. Kinaxis is a recommendation of Stock Advisor Canada.