Tech stocks drove the market to a positive year in 2020, even amid a global pandemic.
The COVID-19 virus has had a major impact on businesses across the globe, but investors have had a front-row seat of witnessing an impressively long list of tech stocks, proving that they’re worth every penny of its frothy valuations.
Investing in tech stocks
I will agree that valuations are getting to be uncomfortably high for some tech stocks. But just because Shopify is trading at a price-to-sales (P/S) ratio of 75 doesn’t mean I’m not banking on the tech stock to crush the Canadian market’s return over the next decade.
If you’re looking for an investment to double in the next three years, you’re going to need to pay up. There is no such thing as a guaranteed 100% return on investment, but these two tech stocks are in a prime position double in value before the end of 2023.
Tech stock #1: Lightspeed
One of the hottest TSX stocks in 2020 was Lightspeed POS (TSX:LSPD)(NYSE:LSPD). The tech stock was up 140% on the year. Investors that were brave enough to buy when the market tanked in March would be sitting on gains of more than 600% today.
When the pandemic first hit North America, many investors were understandably concerned as to how Lightspeed would fare. In early 2020, the tech stock’s core customers were considered to be small- to medium-sized brick-and-mortar retailers. The exact types of businesses that have perhaps suffered the most through this pandemic.
Fast forward to today, and you could argue that Lightspeed has a stronger position in the North American e-commerce market than it did before the COVID-19 pandemic first hit.
The tech stock is coming off a quarter where it posted year-over-year revenue growth of 62%. The growth was driven by a 40% increase in customer locations, which now total more than 80,000.
The tech stock is far from cheap. It trades today at a P/S ratio almost as high as Shopify. But if you’re bullish on the e-commerce industry, this is one tech stock that doesn’t look like it will slow down anytime soon.
Tech stock #2: Docebo
Considering this tech stock was up almost 400% in 2020, growing another 100% in the next three years should not be out of the question.
Docebo (TSX:DCBO)(NASDAQ:DCBO) saw its share price explode, as the pandemic created a massive tailwind for the tech stock. The shift to a work-from-home environment led to a surge in demand for Docebo’s technology.
The $2 billion SaaS company provides training and learning platforms for employees across the globe. The technology is powered by artificial intelligence to help personalize the learning experience for each customer.
The platform does much more than just help train in-house and remote workers. It helps facilitate the entire training process. The platform centralizes all learning materials and keeps track of each user’s progress while helping improve productivity along the way.
At a P/S ratio of 40, shares of Docebo are still considered to be very expensive. Growth of nearly 400% in a year can do that to a stock.
Foolish bottom line
Both of these companies are very richly valued, but the growth potential is evident. Over the next three years, there will likely be high levels of volatility, but I’m betting that Canadian investors will see both tech stocks double before the end of 2023.
