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#1 Tech Stock to Buy After COVID-19 Crisis

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Technology stock market indices have outperformed the S&P/TSX Composite Index over the last 10 years. The COVID-19 pandemic has weighed on the global stock market, but the technology sector has excelled during the crisis. If you don’t have any technology stocks in your retirement portfolio, today is the best day to buy top technology stocks like Open Text (TSX:OTEX)(NASDAQ:OTEX).

The S&P/TSX Composite Index level percentage change is negative at 14.15% less than at the year’s start. By contrast, the S&P/TSX Capped Information Technology Index level percentage change is a positive 16.66% for the year 2020. The S&P/TSX Capped Sector Indices selects and weights stocks from eligible S&P/TSX Composite equities, capping the weight of single stocks at 25%.


Open Text a top winner after the COVID-19 crisis

Open Text is likely to continue exceeding the S&P/TSX Composite Index during the stock market rebound in 2020. Thus far, this stock has only lost 6.2% of its value; meanwhile, the S&P/TSX index has lost 14.22% of its value. During the market rebound, you will want to own this top technology stock in your retirement portfolio.

There are many reasons to invest in Open Text over other technology stocks. For one, the company is using trends toward remote work during the coronavirus-mandated quarantine to restructure and contain costs.

With nearly all its employees working from home, the company is happy with the level of productivity.

A shift to remote work by more than 95 percent of OpenText employees has been “amazingly productive” and as a result, approximately half of its physical offices around the world will not reopen

— Sunil Johal (@JohalSunil) April 30, 2020

Thus, Open Text has decided to close expensive office space permanently to save money.

new from me: in what might (might!) be a bellwether for life after the pandemic, OpenText says it will shut down half its offices permanently since work-from-home is going so smoothly. (…and they’re also restructuring.)

— josh o’kane (@joshokane) April 30, 2020

Apparently, working from home does not lead to lower performance, even during a pandemic. It only makes sense that Open Text would leverage the opportunity to gain a cost advantage over the competition.

Should you buy Open Text stock?

Buying individual stocks versus exchange-traded funds (ETFs) has its advantages even during a COVID-19-induced recession. For one, you can pick solid companies with corporate ethics that align with your personal values.

Nevertheless, Open Text will not give you better returns than buying shares of an ETF that tracks the performance of the S&P/TSX Capped Information Technology Index.

Open Text may be overshadowing the S&P/TSX index, but it is underperforming the Information Technology Index. The IT index is up 16.66% this year, while Open Text lost 6.3% of its market value. If you are interested in the highest returns possible, the IT index may be your best bet.

The only catch is the other stocks in the fund adding to the risk. For example, the IT index likely includes Shopify stock, giving it the added boost. Shopify is up 79.93% as of Monday. Where the price of this stock goes from here, no one knows.

Regardless, I wouldn’t buy into Shopify now or ever. That’s my personal preference, as I don’t trust the stock. I’m suspicious of anything that seems erratically overpriced.

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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 Debra Ray has no position in any of the stocks mentioned. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of and recommends Shopify and Shopify. The Motley Fool recommends Open Text and OPEN TEXT CORP.

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