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3 Tech Stocks That Could Deliver Shopify-Like Returns

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Canadian tech stocks rallied amid the pandemic due to the accelerated digital transition and a structural shift in selling models towards omnichannel platforms. 

For instance, tech giant Shopify (TSX:SHOP)(NYSE:SHOP) stock delivered stellar returns of over 178% in 2020 owing to positive secular industry trends. Meanwhile, it has gained over 6,100% since going public in May 2015. 

While Shopify stock looks expensive (owing to the stellar growth in price), I see further upside on the back of its high-value products, market share growth, strong fulfillment network, global expansion, and growing merchant base. 

Though I am bullish on Shopify, I admit its high price is well out of reach of many investors. So, with Shopify-like growth in the background, I have zeroed in on three Canadian tech companies, including Lightspeed Commerce (TSX:LSPD)(NYSE:LSPD)Dye & Durham (TSX:DND), and WELL Health Technologies (TSX:WELL). These TSX stocks are still within investors’ reach. Moreover, these companies are growing rapidly and are poised to deliver stellar returns in the coming years. 

Lightspeed Commerce

Like Shopify, Lightspeed Commerce gained significantly from the digital shift and delivered exceptional returns. Lightspeed witnessed increased adoption of its platform, which led to impressive growth in its stock. Its stock is up about 246% in one year. Meanwhile, it has outpaced the benchmark index by a wide margin this year.  

Despite the growth, I expect the rally in Lightspeed stock to sustain due to the ongoing shift in selling models towards the cloud-based omnichannel platform. 

Though the normalization in demand could lead to a moderation in Lightspeed’s growth rate in the near term, I believe the strength in its base business, up-selling opportunities, and expansion in the high-growth markets could continue to push its stock higher. Also, growing recurring subscription revenues, new product launches, and accretive acquisitions will likely support its financial performance. Meanwhile, the company’s global expansion, higher average revenue per user, and multiple product adoption by existing customers bode well for future growth. 

Dye & Durham

Dye & Durham stock got listed on the TSX in July 2020. Since then, the stock has risen about 227% on the back of its stellar financial performance, reflecting momentum in its base business and benefits from acquisitions. 

Notably, its revenues and adjusted EBITDA grew over 200% year over year in FY21. Meanwhile, I expect the momentum to sustain in FY22. 

I believe the company’s improving volumes, robust M&A pipeline, and expansion in high-growth markets could continue to drive its revenue and adjusted EBITDA and support its stock prices. Meanwhile, Dye & Durham’s solid customer base, long-term contracts with top customers, higher revenue-retention rate, and lower churn augur well for future growth

WELL Health Technologies

WELL Health Technologies is another solid bet for investors looking for Shopify-like growth. WELL Health stock has also created a significant amount of wealth for its investors. Notably, it has gained about 5,216% since it went public in June 2017 and over 416% in 2020. The robust performance of the stock comes from its stellar financials, benefits from acquisitions, and favourable industry trends.

Looking ahead, I expect the telehealth company’s accretive acquisitions will likely boost its revenues, EBITDA, and cash flows in the coming years and strengthen its competitive positioning in the high-growth markets. Moreover, the continued momentum in its core business, good growth opportunities in the domestic market, and cost-optimization initiatives should support its growth.

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 Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends 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.

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