Shopify (TSX: SHOP)(NYSE:SHOP) is the top stock on the TSX, and its brand is growing in popularity all around the world. It gives anyone the ability to become a vendor and easily sell their products and services online. While the stock is definitely overpriced today, there’s no denying it’s been one of the best investments you could’ve made on the TSX in recent years. In five years, the stock is up almost 4,000%. Even this year, with the COVID-19 putting many companies out of business, Shopify flourishes. Sales soared 97% in the tech giant’s most recent quarterly results, and investors remain bullish on it. Year to date, it’s up around 170%, nearly tripling in value over the past eight months.
Buying it today may not be a great idea, as it’s likely going to run out of steam at some point. But rather than investing in Shopify, investors may want to be on the lookout for what could be the next big tech stock on the TSX. It’s easier said than done, but there are two companies investors should keep an eye on.
The online business platform
The first stock to watch is Lightspeed POS (TSX: LSPD). The Quebec-based business provides a platform for small and medium businesses, particularly in the retail and restaurant industries, to help facilitate their day-to-day operations. From coordinating delivery to managing bookings and gift cards, it offers many value-added services for businesses. And even now, while businesses are struggling, there could be a need for Lightspeed’s services to help cut down on overhead and for companies to become leaner to try and conserve cash and boost profits.
In a sense, Lightspeed could be a more stable investment than Shopify in that it’s dealing with businesses rather than consumers. The ability to create lasting relationships can generate recurring income that minimizes volatility in its earnings. In its first-quarter results, Lightspeed’s sales of $36 million were up 51% year over year. The challenge will be if it can maintain its high growth rate or if it’ll start to cool off later this year.
The augmented reality play
It’s a bit earlier on in the process than even Lightspeed, but NextTech AR Solutions (CNSX: NTAR) is another intriguing option for tech investors. It released its second-quarter results on August 25, and it posted record sales of $3.5 million that were up 290% year over year. It’s a steep increase in sales but with just $906,000 in revenue in the prior-year period, this is still a company that has a lot to prove. But at the same time, it could be in the very early stages where growth investors may want to jump in before it takes off.
The company offers solutions for virtual conferences, virtual education, virtual trade shows, not to mention marketing applications that can help sell products in an increasingly digitized world, allowing people to see items in 3D. There’s potential here, but it’s ultimately going to depend on how bullish you are on augmented reality. If you’re not, you may see this as a fad that doesn’t add value and isn’t investable.
Bottom line
I’m not convinced augmented reality is here to stay, and that’s why I see more potential in Lightspeed to be the next Shopify, especially if it can expand its platform to help meet the needs of more businesses.
