1 TSX Tech Stock You Can Buy and Hold for Decades

This tech stock has delivered more than 1,500% in returns to shareholders over the past decade. If you’re looking for a tech stock to add to your portfolio, this is the company you’re looking for.

| More on:
Financial technology concept.

Image source: Getty Images

Canadian investors witnessed a staggering drop of more than 35% in just over one month earlier this year. A similar drop occurred in markets across the globe, as the COVID-19 pandemic wreaked havoc on many countries’ economies.

A steep drop in such a short amount of time can understandably cause a certain degree of stress to even the most seasoned investors. One time-tested trick to remaining calm during these market drops is to focus on the long-term objectives of why you are investing in the first place. 

In technology stocks we trust

The S&P/TSX Composite Index has rebounded very impressively since the index hit the year’s low on March 23. The index has rebounded by close to 50% since that last week of March. The broader market may have rebounded well, but not all industries have reacted the same to the damaging effects of the COVID-19 virus.

As interest rates have continued to drop throughout the year, bank stocks have experienced significant declines in profitability. This has lead to many banks experiencing year-to-date returns lagging the market. The technology industry, however, has had a slightly different experience over the past six months than most of the major banks.

The temporary closure of many physical store locations across the country, including work offices, has dramatically increased the reliance of technology for both consumers and businesses. Consumers, somewhat effortlessly, adjusted by increasing e-commerce spending, while many employees ditched their long work commutes to set up new home offices. 

I’ve reviewed a top TSX tech stock that is in a prime position to deliver market-beating returns for many decades to come. The company is a market leader with a strong competitive advantage and only stands to see market share increase as a result of the pandemic’s effects on the market.

Enghouse Systems

Enghouse Systems (TSX:ENGH) has delivered growth of more than 1,500% to shareholders over the past decade. It may be a tall order to repeat these types of returns over the next 10 years, but the company is in a good position as any to outpace the Canadian market’s returns.

The $4 billion company is not a household name among Canadian investors, which may partly be due to its area of specialization. Enghouse Systems develops enterprise-level software solutions to clients across the world.

The company also specializes in two key areas, which are likely to see an uptick in demand due to the recent shift to a work-from-home culture, which includes visual computing and telecommunications networks.

The tech company has also aggressively reinvested a significant amount of profits back into the business through acquisitions. A core Enghouse Systems objective is to build a diverse portfolio of software enterprises, which explains the list of strategic acquisitions it has made over the years. 

The company trades today at a forward price-to-earnings ratio of close to 50, so the stock is by no means cheap. But if you’re on the hunt for a growth stock to outperform the Canadian market, this is one company that is worth paying a premium to own.

Foolish bottom line

There may be lots of uncertainty in the short-term future of the stock market, but for long-term investors, this should not cause any concern. 

Enghouse Systems has delivered returns equal to more than 1,500% to shareholders over the past decade, and I’m betting it’ll at least outperform the Canadian market over the next 10 years.  

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 Nicholas Dobroruka has no position in any of the stocks mentioned. The Motley Fool recommends Enghouse Systems Ltd.

More on Tech Stocks

work from home
Tech Stocks

Could Lightspeed Stock Be a Big Winner in 2023?

Investors can capitalize on Lightspeed’s low valuation and benefit from the recovery in its price.

Read more »

Tech Stocks

TFSA Passive Income: How I’m Investing to Make $2,000/Year From Dividends

I am increasing my dividend income by investing in dividend stocks like the Toronto-Dominion Bank.

Read more »

Electric car being charged
Tech Stocks

Is Now The Time to Buy EV Stocks?

EV stocks may be down now, but don't count them out. They'll soon be back up again, so now may…

Read more »

Happy shoppers look at a cellphone.
Tech Stocks

Better Buy: Amazon vs. Apple Stock

While both Amazon and Apple have bright long-term prospects, Apple stock looks like the best tech company to invest in…

Read more »

A stock price graph showing declines
Tech Stocks

Has Blackberry Stock Finally Stopped the Slide?

Blackberry has not yet delivered the kind of financial results that we know it can, but this is about to…

Read more »

Car, EV, electric vehicle
Tech Stocks

Chinese Stocks are Soaring: This TSX Stock Could Gain

Magna International stock could benefit from China's economic re-opening.

Read more »

Money growing in soil , Business success concept.
Tech Stocks

1 Oversold Growth Stock to Buy for Major Returns in 2023

This growth stock could be the best Canadian stock to buy now for 2023, with shares possibly doubling back to…

Read more »

Hands holding trophy cup on sky background
Tech Stocks

Could BlackBerry Stock Be a Big Winner in 2023?

BlackBerry (TSX:BB) stock more than halved last year amid the tech stock selloff. Could 2023 be a winning year for…

Read more »