Absolute (TSX:ABT) or Docebo (TSX:DCBO): Which One Will Explode in 2021?

TSX’s tech sector is likely to see two new superstars in 2021. The Absolute Software stock and Docebo stock are well-positioned for a breakout year.

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The new retail empire, Shopify, is the face of Canada’s technology sector. From an obscure snowboard online seller, the e-commerce platform rose to become the largest publicly listed company on the TSX in 2020. The company reaped colossal success because its goal aligns with the desire of merchants to grow their businesses.

This year, Absolute Software (TSX:ABT)(NASDAQ:ABST) and Docebo (TSX:DCBO)(NASDAQ:DCBO) are on the cusp of a breakout year. Both companies exhibit massive growth potentials.

Absolute Software, a cloud-based endpoint visibility and control platform is up +31.92% year-to-date and outperforms the TSX (+16.02%). Docebo, a cloud-based learning management system (LMS), is down 7.25% thus far in 2021, although its trailing one-year price return is 113.31%. The question now is which business could explode in 2021.

Cybersecurity market trends

According to a report by Grand View Research, the global cybersecurity services market could grow to about US$192.7 billion by 2028. Cybersecurity breaches are ever-increasing such that enterprises need to address the vulnerabilities in apps, networks, and systems.

Absolute Software help organizations recover and resume normal operations in the face of these security breaches. The goal of this $884.75 million company from Vancouver is to bring about a world where security and IT professionals always retain control over their devices and data. It’s the only company in the world with a firmware-embedded endpoint visibility and control platform.

More than 13,000 customers globally use Absolute Persistence so they could stay resilient and counter the ever-changing cyber threats. Today, Absolute’s technology is factory-embedded by the top device and systems manufacturers. Microsoft, Dell, Hewlett-Packard, and Lenovo are its high-profile partners, to name a few.

Following the 15% revenue growth in the first nine months of fiscal 2021 (month ended March 31, 2021), management expects to end the year with a 12% to 14% annual growth. Apart from the potential 23.4% upside ($17.87 to $22.06) based on analysts’ forecasts, Absolute pays a 1.79% dividend.

Modern, integrated LMS

LMS is equally vital as cybersecurity, although its potential market size globally by 2025 is smaller at US$25.7 billion. Docebo provides a multi-product learning suite for the learning needs of enterprises. The $2.51 billion company from Toronto caters to customers in North America, Europe, and Asia-Pacific.

In the post-pandemic world, enterprises need to develop learning programs to train internal employees, partners, and customers. Thus, digital learning is the core, long-term strategy of Docebo. The 60.7% and 67.1% increase in total revenue and profit margins in Q1 2021 (quarter ended March 31, 2021) indicates robust business growth.

Amazon Web Services, Thomson Reuters, and Walmart are among the over 2,000 global brands that utilize Docebo’s modern, integrated, enterprise learning solution. Docebo’s newest customer agreement is with Lightspeed POS. In the sports vertical, its customers include the Toronto Blue Jays, First Tee, and Spurs Sports and Entertainment.

The recently launched comprehensive learning technology platform, Docebo Learning Suite, extends beyond content delivery. It aims to meet challenges across the entire learning lifecycle. This tech stock isn’t a dividend payer. However, market analysts recommend a strong buy rating. They see the current share price of $76.75 potentially climbing as high as $94.64 in the next 12 months.

Tech superstars in the making

While Shopify dominates the tech sector, it’s not the only viable option. Absolute Software and Docebo could be the tech superstars in the near future.

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.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon, Docebo Inc., Lightspeed POS Inc, Microsoft, and Shopify. The Motley Fool recommends Absolute Software Corporation and recommends the following options: long January 2022 $1,920 calls on Amazon, long January 2023 $1,140 calls on Shopify, short January 2022 $1,940 calls on Amazon, and short January 2023 $1,160 calls on Shopify.

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