Forget Lightspeed Stock: This Canadian Tech Stock Is Flying Higher

This little-known tech stock has done far better than Lightspeed POS (TSX:LSPD)(NYSE:LSPD) in the past three years! Check it out.

| More on:
analyze data

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

So many investors know about Shopify and Lightspeed. Some believe that Lightspeed stock is a better buy than Shopify stock. Here’s a relatively unknown tech stock that isn’t in the limelight but has outperformed both tech stocks and is still a bargain!

Converge (TSX:CTS) stock has flown higher than both LSPD stock and SHOP stock in the past year and three years. Over three years, the little gem has made its stockholders massive amounts of money. It turned an initial $10,000 investment into $131,000, a 13-bagger!

The stock came from a small base, earning almost 18 times its revenues in the period! That’s approximately 162% of revenue growth at a compound annual growth rate (CAGR) from 2017 to 2020.

Below is a chart that compares the past year’s price action of the three tech stocks Converge, LSPD stock, and SHOP, which provides a more realistic picture, since Converge is a larger company now and has graduated from the TSX Venture Exchange to the TSX.

CTS Chart

Data by YCharts.

Growth of the tech stock

Converge is one of the fastest-growing IT service providers in North America. It offers hybrid IT solutions to the mid-market and has been employing a successful M&A strategy due to its cross-selling and integration capabilities.

Because of its focus on the mid-market, it’s able to provide more customized technical workshops and executive briefings for its clients and potential customers, thereby, excelling in cross-selling.

The IT company’s trailing 12-month revenue stands at just north of $1 billion, which is still a nice growth rate of 34% year over year. Its market cap stands at more than $1.2 billion. In Q1 2021, it reported adjusted EBITDA of almost $19 million, an increase of 71% from the prior year’s quarter.

The company is extending its M&A success in North America to Europe and has invited Thomas Volk, who is a senior executive with unique experience leading global enterprises and mid-market companies to join its board of directors, which will help with the expansion into Europe.

Partnering with IT behemoths

Converge has the expertise to develop customer solutions with IBM and Intel technologies. Converge was the recipient of five IBM awards this year, including the IBM Beacon Award, the Top North America Sell Business Partner of the Year, the Top North America IBM and Red Hat Synergy Partner of the Year, the IBM Data and AI Business Unit Excellence Award for Cloud Pak for Data, and the IBM Business Unit Excellence Award for Protect: Digital Trust.

Additionally, Converge recently achieved Titanium partner status with Intel. The press release noted that the status is reserved for the most valued program members who demonstrate superior business and technical skills as well as leadership in the development of innovative customer solutions based on Intel technologies.

The Foolish takeaway

Since analysts have started covering the tech stock, they have been steadily increasing its price target. Currently, they estimate Converge stock will be worth $10.11 per share over the next 12 months for incredible near-term upside potential of 33% from $7.60.

The stock is volatile, though. For example, it could easily correct to $6.50 per share with no material reason. If it does decline to that level, it could be a superb investment opportunity for growth over the next few 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 Kay Ng owns shares of Converge and Shopify. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of and recommends Shopify and Shopify. The Motley Fool owns shares of Lightspeed POS Inc. The Motley Fool recommends Intel and recommends the following options: short January 2023 $1160 calls on Shopify, long January 2023 $1140 calls on Shopify, long January 2023 $57 calls on Intel, and short January 2023 $57 puts on Intel.

More on Tech Stocks

Arrow descending on a graph
Tech Stocks

2 Industries That Saw the Worst Decline Last Month

The TSX has been declining at a sharp angle since the beginning of June. And two industries (crypto and cannabis)…

Read more »

STACKED COINS DEPICTING MONEY GROWTH
Dividend Stocks

TFSA Investors: Turn $1,000 Into $10,000 in 10 Years

10-fold growth within a decade is rare but not unheard of. You can capture this growth either by predicting a…

Read more »

Growth from coins
Tech Stocks

Got $1,000? Buy These 3 Under-$20 Growth Stocks to Earn Higher Returns

These under-$20 growth stocks can deliver solid returns in the long run.

Read more »

Shopping card with boxes labelled REITs, ETFs, Bonds, Stocks
Tech Stocks

TFSA Investors: 3 TSX Stocks You’ll Regret Not Buying on the Dip

Among wide range of investments allowed in a TFSA, now is the time to invest in stocks.

Read more »

Tired or stressed businessman sitting on the walkway in panic digital stock market financial background
Tech Stocks

2 Stocks That Lost Over 50% in 2022

The recovery of the TSX’s tech superstar and a promising high-growth stock that lost more than 50% in 2022 is…

Read more »

Man holding magnifying glass over a document
Tech Stocks

Why BlackBerry Stock Looks Way Too Undervalued After Q1 Earnings

BB stock hasn’t seen any appreciation lately, despite its continued progress on the IVY platform and early signs of the…

Read more »

A stock price graph showing declines
Tech Stocks

BlackBerry Q1 Earnings: The Declining Revenue Streak Continues!

Will BB stock break below $6?

Read more »

A bull outlined against a field
Tech Stocks

After the Recent Fall, it’s Time to Turn Bullish on 2 TSX Growth Stocks

With the kind of lows these TSX stocks have seen, the negatives appear to be priced in.

Read more »