Canadian tech companies are top performers among broader markets this year. Their latest quarterly results only underline a remarkable growth story. Let’s take a look at three such TSX stocks that soared after solid quarterly earnings last week.
Top TSX stock: Kinaxis
Kinaxis (TSX:KXS) reported one of the best quarters last week, with its revenues growing to $61 million, an increase of almost 45% year over year. Its net income grew to $13 million, representing an increase of 65% compared to the same quarter last year. Kinaxis shares soared almost 4% after large swings last week.
The management clarified that the pandemic did not have a significant impact on Kinaxis’s operations and financials. It has given upbeat guidance for the second half of the year, which could keep the stock higher.
Kinaxis provides cloud-based software that helps smooth the supply chain planning and digital operations. As companies rework their disturbed supply chains due to the pandemic, Kinaxis could see higher-than-usual demand.
The stock has already been up a massive 110% this year. The rally might continue, despite the valuation concerns after its better-than-expected second-quarter earnings.
Top TSX stock: Lightspeed
A $3.2 billion software company Lightspeed (TSX:LSPD) reported another strong quarter last week. Its revenues increased by 51% to $36 million compared to the same quarter last year, but the loss widened.
Its steep revenue growth during the quarter came in as a sweet surprise for investors. Hospitality and retail sectors, some of the hardest-hit amid the pandemic, contribute a large chunk in Lightspeed’s consolidated revenues.
However, despite the uncertainties, the pandemic has highlighted the need for small- and medium-sized businesses to go digital and increase their online presence.
Lightspeed provides an all-in-one and a cloud-based software platform that enables consumer engagement, payments and inventory management, and business growth. The changing consumer behaviour, particularly due to the pandemic, will likely drive Lightspeed’s growth in the next few years.
LSPD stock is up almost 15% so far in 2020. Despite its relatively subdued performance, the stock looks overvalued and could trade excessively volatile.
Top TSX stock: Cargojet
Another TSX stock that could continue to move higher after its solid Q2 earnings is Cargojet (TSX:CJT). The stock is already up more than 85% this year. Cargojet’s revenues increased a strong 65% in the second quarter.
Its top-line growth was more on the expected lines and notably benefitted due to e-commerce growth. The company also witnessed a revenue increase in its business segment late in the quarter, which might continue to increase as economies gradually re-open after lockdowns.
Cargojet’s scale and unmatched network are big competitive advantages that make it stand tall in the industry. It will likely see extended growth driven by the booming e-commerce industry and its unique overnight delivery. The capital-intensive air cargo business is a high barrier industry to new entrants, which averts competition.
Despite valuation concerns, Cargojet stock remains an attractive investment proposition for aggressive investors. It could continue to outperform with its leadership position in a high-growth industry.
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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 Vineet Kulkarni has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends CARGOJET INC. The Motley Fool owns shares of Lightspeed POS Inc. The Motley Fool recommends KINAXIS INC.