3 Stocks You’ll Want to Buy in the Tech Sell-Off

The sell-off in tech stocks provides investors with a rare opportunity to buy up these revenue drivers before they soar back up again!

| More on:
5G chip

Image source: Getty Images

After a year of incredible gains for tech investors, it looks like anxiety has set in. Rising interest rates and government stimulus could mean that inflation has spooked investors who have been putting their cash into high-growth tech investments during the pandemic. Others fear that with the pandemic behind, it’ll be a return to pre-pandemic levels.

However, long-term investors should have no fear about today’s tech sell-off. In fact, the drop creates a solid opportunity to buy a larger stake in long-term holds. So if you’re looking for the best tech stocks to buy in the pullback, consider these three.

Shopify stock

It looks like investors have been selling any tech stock during this sell off, the good and bad companies included. This has created some stellar bargains for companies in the tech sector, and that includes Shopify Inc. (TSX:SHOP)(NYSE:SHOP).

True, the company is still pricey, but that comes with the territory for this $170 billion company. When the e-commerce company announced its fourth quarter results last month, it showed that last year’s growth doesn’t have any sign of slowing. Revenue grew 94% year over year, and gross merchandise volume (GMV), which shows the value of products sold on Shopify, skyrocketed by 99%!

All this growth was supported by a soaring rise in subscription revenue of 53%, and merchandise solution of 117%! And even more was fuelled by the number of merchants coming onto the platform each month, setting a record for the third quarter. Yes, e-commerce will slow, but growth will still come. E-commerce isn’t going away, with online sales in the United States recently growing by 32% year over year. There’s just simply no going back now.

Shares are down 26% as of writing from all-time highs, so this stock looks cheap compared to those numbers. And given how the stock has acted before, it’s likely to be a rare occurrence that won’t last long.

Real Matters

If you needed proof that Real Matters Inc. (TSX:REAL) was going to do well even during a market crash, last year proved it. The company saw revenue soar with lower interest rates. Companies across the continent used the software platform to renew loans and mortgages at lower rates.

But growth keeps coming. The $1.4 billion company reported strong year over year growth in its U.S. Title segment of 24.8%, and adjusted EBITDA increased by 19.7%. The U.S. mortgage market in particular remains strong as people continue to refinance mortgages. Canada also posted strong results, as it continues to take on the market share and stronger market volumes. Revenue was up 40.7% and adjusted EBITDA by a whopping 67.8%!

And yet the stock still has a P/B ratio of 5.1, and a P/S ratio of 2.2, making it a valuable stock in today’s pullback. Shares are up 15% in the last year, but that’s after a huge fall of 54% This provides a superb jumping in opportunity for when a market correction occurs.

Kinaxis

Investors still think twice about buying up Kinaxis Inc. (TSX:KXS) stock, and for no good reason. The company saw immense growth in 2020 with enterprise companies signing on to the supply chain management software. The $4.6 billion company doesn’t have one company taking up more than 5% of its total portfolio. And that includes the new customers to its service.

But the company is well known for its client retention and this means all these new clients are recurring revenue that will around for years. Meanwhile it continues to be an innovator in supply chain management, a service practically every business needs these days.

Earnings proved the company’s worth recently with 25% year over year growth in software as a service (SaaS) revenue, and 24% growth in adjusted EBITDA. The company met or exceed every aspect of initial 2020 guidance which even pre-dated the pandemic. Sales grew by over 40% from 2019, and the company expects further organic and acquisition growth to support its growing pipeline.

Yet shares are only up 46% in the last year, after a fall of 34% as of writing. So again you have a prime opportunity to pick up this stock before another jump.

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 Amy Legate-Wolfe owns shares of KINAXIS INC and Shopify. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of and recommends Shopify and Shopify. The Motley Fool recommends KINAXIS INC and Real Matters Inc.

More on Tech Stocks

grow dividends
Tech Stocks

2 ETFs That Grew Over 98% in the Last 5 Years

Unlike individual stocks that represent a market unit, ETFs usually represent a market segment. If they follow sector-specific indexes, they …

Read more »

work from home
Tech Stocks

RRSP Investors: Want to Turn $10,000 Into $50,000?

With February fast approaching, our focus naturally turns to RRSP investing. This is a good time to make note of …

Read more »

Shopping and e-commerce
Tech Stocks

Can Shopify Recover to New All-time Highs in 2022?

With more than 1.7 million merchants on its platform, Shopify (TSX:SHOP)(NYSE:SHOP) is undoubtedly a core platform for SMBs. The company’s software-as-a-service platform …

Read more »

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Tech Stocks

The 5 Best High-Growth TSX Stocks to Buy on the Dip

The broader market selling, primarily in high-growth stocks, provides a solid opportunity for investors to buy future winners at lower …

Read more »

Coronavirus written newspaper close up shot to the text.
Tech Stocks

The 2 Best Tech Stocks to Buy Today for Low-Risk Investors

Overvalued tech stocks are undergoing a major correction after inflating on the back of high liquidity from fiscal stimulus packages. …

Read more »

Choose a path
Tech Stocks

Is Ripple Primed for 100% Growth in 2022?

From an investment perspective, most cryptocurrencies seem similar. Almost all of them seem volatile, and while some get more limelight …

Read more »

Tech Stocks

Tech Crash: 2 Tech Stocks Analysts Have Sliced in Half

The TSX has continued to wax and wane over the past week. After a huge fall on Monday, shares started …

Read more »

Hand holding smart phone with online shop concept on screen
Tech Stocks

Shopify Stock Selloff: Could it Turn Around in February?

Shopify (TSX:SHOP)(NYSE:SHOP) continues to be one of the worst-affected stocks amid the ongoing market selloff. After posting its worst weekly …

Read more »