The rise of Redditor-fueled meme stocks is not news to anyone with an internet connection, regardless of whether they are even remotely interested in the stock market. Retail investors banded together to cause an artificial rally in share prices for several stocks like GameStop and AMC Entertainment in a bid to pull off a short-squeeze and outplay Wall Street players.
While the short-squeeze moves died down, last month saw another astonishing rally. Retail investors coordinated another round of short-squeezes that led to a massive spile for these meme stocks that do not possess the fundamentals to justify high prices.
The exponential gains for these stocks attracted several investors looking to make quick profits. However, true wealth generation as a stock market investor comes through long-term investing strategies. Finding companies with long-term potential to derive consistent and outsized returns to beat markets are true wealth-generation stocks that you should consider adding to your portfolio.
Docebo (TSX:DCBO)(NYSE:DCBO) is one such stock that you can consider for this purpose. Today I will discuss this top Canadian tech stock to help you make a more well-informed decision about whether it would make a good addition to your investment portfolio.
Up 400% since Initial Public Offering
Docebo became a publicly traded company in October 2019. Since its debut on the stock market, the Canadian tech company has appreciated by over 400% at writing. Docebo offers cloud-based learning management systems to train internal and external workforces, partners, and customers to its internationally diversified clients.
The company’s client base consists primarily of enterprises relying on its products to expedite learning processes and improving productivity. Docebo’s sales increased by over 61% on a year-over-year basis in Q1 2021 to $US21.7 million. The company’s subscription sales accounted for over 90% of its revenues, raking in $US19.8 million, allowing the company to enjoy a massive gross profit of US$17.9 million.
The company’s annual recurring revenue was 60% higher in Q1 2021 than it was in the same period last year. Docebo reported a negative adjusted EBITDA of US$2.5 million, reflecting 11% of sales. The figure is lower than its negative adjusted EBITDA for the same period last year, reflecting 18% of sales.
Given the developments in the global landscape, Docebo’s growth in recent years has the backing of factors that provide greater potential for sustained growth. There is an increasing demand for services provided by the company.
Unlike Docebo, GameStop’s revenues have declined due to an increasing shift towards digital gaming. Cinema giant AMC Entertainment suffered significant losses due to the pandemic and an increase in online streaming services.
Docebo is trading for $69.30 per share at writing and is down by 16.25% from its all-time high in December 2020. If you are interested in buying the high-quality tech stock as a long-term pick, now could be an ideal time to buy Docebo shares on the dip.
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 Adam Othman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Docebo Inc.