Docebo (TSX:DCBO) Stock: Should You Invest in This Canadian Growth Stock Today?

Docebo stock could be an excellent investment to consider, despite its rapid growth bringing the company’s share prices to all-time highs.

| More on:
Growing plant shoots on coins

Image source: Getty Images

The pandemic came along with many surprises for stock market investors. The growth of the tech sector was already happening before the pandemic struck, but investing in technology became a massive trend among investors, as publicly traded companies in the industry saw massive tailwinds due to the pandemic propel them to greater heights.

The growth of the tech sector was the primary driver for the stock market during the downturn last year. While financials, energy, and materials have had a stellar year so far for the broader Canadian market’s performance, the tech sector still holds a crucial position in the stock market in terms of offering growth potential for stellar shareholder returns.

Today, I will discuss a Canadian tech sector giant that has been showing rapid growth in the stock market and whether it could be worth adding to your investment portfolio after its most recent surge.

The possibility of another Shopify

Shopify stock came along as the epitome of high-growth Canadian tech stocks when it started trading on the TSX in 2015. Up by over 5,200% at writing since its IPO, Shopify stock is the undisputed blue-eyed darling for the Canadian tech sector.

Investing in the company right now will not provide you with similar shareholder returns. It might even be impossible to find another stock that can offer such stellar shareholder returns. However, the Canadian tech sector does provide opportunities that could be worthwhile as a long-term holding for you to enjoy substantial growth.

A high-growth Canadian tech stock

Docebo (TSX:DCBO)(NASDAQ:DCBO) is not a multi-bagger of the likes of Shopify in terms of rapid growth. Founded in 2005, the e-learning platform initially launched an open-source model that could be installed on enterprise servers. Things have become quite different since its shift to a cloud-based Software-as-a-Service (SaaS) model in 2012.

Docebo holds the claim of being the first company to utilize AI to transform corporate e-learning into something that offers its clients a competitive edge in their respective industries through data-driven insights that enhance the user experience. The Learning Management System (LMS) software market has been in high demand due to the pandemic, as most of the workforce continues to work from home.

Docebo has won over several high-profile clients over the last two years, with Thomson Reuters, Hewlett Packard Enterprises, and Amazon Web Services as some of the most significant names. The company’s high customer-retention rates have allowed it to increase its recurring sales by 65% every year between 2016 and 2020.

While the company has a significant cash-burn rate as it continues to report losses, it has increased its average contract value threefold in the last five years. Considering that the company managed to report a positive cash flow for the first time ever in 2020, it could be well on its way to greater profitability that reflects its rapidly growing share prices.

Foolish takeaway

The LMS market that Docebo operates in is expected to touch the US$30 billion mark by 2025. At its current valuation, DCBO offers a market capitalization of just $3.44 billion. Considering the rapid growth expected for the company’s niche industry, Docebo stock could still be a viable investment, because it can offer plenty more growth to investor capital.

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. Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon, Docebo Inc., and Shopify. The Motley Fool 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.

More on Investing

Dice engraved with the words buy and sell
Tech Stocks

Is Lightspeed Stock a Buy, Sell, or Hold?

Lightspeed (TSX:LSPD) stock was supposed to surge after Dax Dasilva's return, yet it's still stagnating. So, what should investors do…

Read more »

Gas pipelines
Energy Stocks

Buy, Sell, or Hold Enbridge Stock

Are you considering Enbridge (TSX:ENB)? Enbridge stock is a popular holding, but not all investors agree on whether you should…

Read more »

Arrowings ascending on a chalkboard
Dividend Stocks

The 5.5% Dividend Stock Set to Dominate the TSX

TD Bank (TSX:TD) stock looks severely undervalued while the yield is around 5.5%.

Read more »

protect, safe, trust
Dividend Stocks

Passive Income: How to Earn Safe Dividends With Just $10,000

These three dividend stocks with resilient business models and a growing earnings base can provide durable passive income.

Read more »

Digital background depicting innovative technologies in (AI) artificial systems, neural interfaces and internet machine learning technologies
Tech Stocks

1 of the Best Canadian AI Stocks (With Dividends) to Buy Now

OpenText is an AI stock that trades at a significant discount to consensus price target estimates in June 2024.

Read more »

woman analyze data
Investing

The Best Stocks to Invest $2,000 in Right Now

For investors seeking the best stocks to buy for an opportunity to generate life-changing wealth, here are three options to…

Read more »

Printing canadian dollar bills on a print machine
Dividend Stocks

How to Use Your TFSA to Earn $34,150 Per Year in Tax-Free Income

Canadian investors can hold undervalued TSX dividend stocks in a TFSA and benefit from outsized gains 2024 and beyond.

Read more »

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Thursday, June 20

After surging to fresh record highs last month, the TSX Composite benchmark currently trades at its lowest level since February…

Read more »