Considering the Canadian market witnessed a 35% drop earlier this year, being down 10% year to date doesn’t look too bad right now. The S&P/TSX Composite Index has since rebounded by gaining almost 40% since that March 23rd low.
There’s no question that the volatility this year has been off the charts. For short-term investors, the year may seem as if it has been a disaster. But for long-term investors that can stomach the short-term volatility, this year has provided an abundance of buying opportunities.
A benefit to investing Foolishly is that you do not need to stress over the day-to-day movements in stock prices. Foolish long-term investing focuses on buying great companies, holding for the long term, and adding to your winners along the way. Doesn’t that sound a bit more appealing than trying to get in and out of positions frantically on a daily basis?
I’ve reviewed a top TSX tech stock and highlighted why it has plenty of growth still ahead. I don’t own shares yet, but it’s definitely on my watch list right now.
Real Matters
The $2 billion company is in the business of providing technology and network management solutions to mortgage lending and insurance industries. Headquartered in Markham, Ontario, Real Matters (TSX: REAL) serves clients in both the U.S. and Canada.
The tech company has had a tremendous run this year. While the Canadian market has witnessed a decline of 10% in 2020, Real Matters’s stock price has seen a rise of close to 115% this year already. The majority of that gain has come within the last three-and-a-half months. Since March 18, the share price has grown an incredible 170%.
The company has been public for just about three years. In that time, shares have largely outperformed the Canadian market. With plenty of growth still ahead, there is no reason why this trend should not continue.
How has COVID-19 impacted the business?
There are now many question marks surrounding the housing industry, and how it will be affected by the recession that was largely caused by the COVID-19 pandemic. It’s perhaps a bit early to determine exactly how the housing market will be affected, but we do have an idea of what type of impact it has had on Real Matters’s business.
The most recent quarterly report was presented on May 6, looking at financial results for the second quarter ended March 31, 2020. Management explained how they have not yet experienced any significant adverse impacts from the effects of the COVID-19 virus. Real Matters has, however, witnessed a shift in how consumers have been utilizing the company’s products and services.
Management highlighted how the volume in consumer activity has shifted in the U.S. to predominantly refinancing services. In comparison, the prior year saw the majority of activity come from purchase transactions. Management went on to say how their prediction is that the purchase activity will continue to decline, while consumers will increasingly keep requesting to refinance their mortgages.
In strong balance sheets, we trust
The company’s strong quarterly numbers have helped solidify the balance sheet to help weather the storm through this pandemic. Second-quarter revenue increased 70% year over year, which was driven by a surge in U.S. performance. U.S. Appraisals saw an increase of 65%, while U.S. Titles increased by an impressive 108%.
Management explained how the company’s strong balance sheet puts Real Matters in a secure spot during a very uncertain time in the economy. The tech company has $89 million in cash and cash equivalents on the sidelines and has access to an additional $40 million through credit facilities.
Foolish bottom line
There will likely be more short-term volatility in not only the housing industry but the entire economy. For Foolish investors with a long-term horizon that can endure the short-term volatility, Real Matters is definitely one stock you should seriously consider adding to your portfolio today.
