The Motley Fool

2 Tech Stocks That Could Outgrow Lightspeed

Financial technology concept.
Image source: Getty Images

There’s no question Lightspeed Commerce (TSX:LSPD)(NYSE:LSPD) is one of the top Canadian tech stocks you can own. The massive company has grown its operations rapidly in the last few years.

At its most recent earnings report, LSDP showed incredible growth resulting in a massive rally in the stock. Among other things, quarterly revenue grew by over 220% year-over-year, to more than US$115 million. And that’s off the back of a still-impressive 50% year-over-year growth in the quarter the year prior.

Furthermore, transaction-based revenue grew by over 450%, and recurring revenue more than doubled.

These consistent and, in fact, increasing sales have proven Lightspeed is one of the top growth stocks in Canada, alongside other top companies like Shopify.

And while these massive tech stocks have become extremely dominant, they both continue to grow massively in size, which will ultimately lead to slower growth in the coming years.

There’s nothing wrong with owning a large-cap tech stock. Sure they may not grow as fast as they did in the past, but with a more established business, there is less risk for investors looking to buy.

If you want more growth potential, though, you’re going to have to buy smaller stocks, which ultimately means taking on more risk.

That’s why for many investors, it’s worth considering owning both these established tech stocks, as well as smaller up-and-coming names that can outgrow Lightspeed over the long run.

So if you’re an investor who’s looking for the most growth potential possible, here are two of the top Canadian tech companies that should be able to outgrow LSPD stock over the coming years.

A top digital forensics stock that could outpace Lightspeed

One of the best Canadian stocks to buy right now for growth investors is Magnet Forensics (TSX:MAGT).

Magnet is a rapidly growing business aiding companies and organizations to investigate and recover digital evidence and forensics from several different devices.

And while Lightspeed stock may be growing rapidly because e-commerce technology continues to gain popularity, the digital crime market is growing rapidly too.

Last year there was just under US$1 trillion in damages from cybercrime. By 2026, just five years from now, that’s expected to increase to more than US$10 trillion.

And not only is the industry set to grow rapidly, but Magnet has a strong position in the space. The company has customers from several industries, including several government agencies showing it’s a well-respected and trusted business.

Currently, its market cap is less than $500 million, much cheaper than Lightspeed stock, giving Magnet a tonne of growth potential over the coming years, as these cyber-attacks become more frequent.

So if you’re looking for a top growth stock that can outpace LSPD, Magnet is ideal because you can get in essentially on the ground floor.

A rapidly growing crypto stock that’s already outgrowing LSPD

In addition to Magnet, Galaxy Digital (TSX:GLXY) is another high-quality growth stock that can outpace LSPD. In fact, Galaxy has already considerably outperformed Lightspeed’s stock in the last year.

LSPD lightspeed stock

And while it may not be as cheap as Magnet, it’s still less than half the market cap of Lightspeed stock.

One of the reasons why Galaxy is the better buy, in my opinion, is that there is so much potential with cryptocurrencies and blockchain technology.

And in addition to all the ways that it’s monetizing the cryptocurrency boom, Galaxy Digital is also investing in several high-potential businesses in the space. For example, it recently announced investments in 14 different NFT businesses.

This helps diversify the operations making the stock more resilient while giving investors significant potential from growth.

LSPD stock is certainly a top growth stock to buy. In my view, though, Galaxy is a better long-term investment and should continue to outpace Lightspeed stock for years to come.

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 Daniel Da Costa owns shares of Galaxy Digital Holdings Ltd. The Motley Fool owns shares of and recommends Lightspeed POS Inc, Lightspeed POS Inc., and Shopify. The Motley Fool recommends the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.