Technology stocks on the TSX have largely outperformed the S&P/TSX Composite Index in 2021. The fact is, many of these stocks are buoyed by long-term trends that are transforming our world.
While technology stocks are no longer cheap like they were at this time last year, many of them have attractive growth profiles that should last for years. Here are four of the best quality TSX tech stocks you can find out there today.
Topicus.com: A top tech spin-out on the TSX
Earlier this year, Topicus.com (TSXV:TOI) was spun out of Constellation Software (one of Canada’s top-performing technology stocks). So far, it has been a huge success. Its stock is up 122% ever since its inception in February.
Topicus is intriguing for a few reasons. First, it is consolidating a very fragmented market of niche software businesses in Europe. Second, it has a strong opportunity to also grow organically by replicating its software service offerings in new European markets.
Third, Topicus.com’s board is populated with Constellation’s CEO and various segment leaders. Given this influence, Topicus could potentially duplicate similar success as its parent company. This stock is pretty expensive today. Yet, it would be pretty attractive on any decent pullback.
Telus International: A top TSX IPO stock
Another spin-out in February of this year was TELUS International (TSX:TIXT)(NYSE:TIXT). It has taken some time for the stock market to give this company any attention. Yet, it too is starting to see some strong momentum. It is up 13.5% year to date.
This TSX stock suits all the exciting technology buzz words of today. Artificial intelligence, data analytics, digital experience, and cloud integration are all areas in which TI excels.
Growing by over 30% a year, it is very different from its Steadie Eddie telecom parent, TELUS. Some of the world’s largest tech businesses are its top customers. Yet, this business still has lots of room to expand its service offerings. It is still early innings for this high-quality business.
Lightspeed Commerce: A global commerce platform
The COVID-19 pandemic has drastically changed the way we live, work, shop, and play. These trends have actually benefitted Lightspeed Commerce (TSX:LSPD)(NYSE:LSPD). The stock is up 74% since the start of the year.
Lightspeed has done a great job of either developing or acquiring a range of omnichannel commerce solutions for its retail or hospitality-focused merchants. Over the year, it has drastically expanded its geographic footprint and added merchant optionality.
This better positions it head-to-head with competitors like Shopify. This TSX stock is notoriously expensive, but it has consistently performed in line with its guidance and market expectations. It just raised some cash, so I expect it is primed to continue its growth-by-acquisition strategy.
Descartes Systems: A global logistics software provider
If you have noticed everyday items have recently gotten more expensive, you can blame that on inflation. You can also blame it on a global supply-chain backlog. This scenario has created a perfect environment for logistics software solutions providers like Descartes Systems (TSX:DSG)(NASDAQ:DSGX).
It operates the largest logistics network in the world. Similarly, it has a suite of software services that create critical efficiencies for freight and logistics-intensive businesses. As a result, the company is seeing an incredibly strong demand for its array of solutions.
This TSX stock is very profitable and produces a great stream of free cash flows. It also has a great balance sheet that should continue to fuel outsized organic and acquisition growth. This stock is up 40% in 2021, so it is a bit pricey. However, this is a case of paying up for quality to capture some long-term stable returns.