The Canadian market came crashing down in the last week of November. Still, the S&P/TSX Composite Index is up over 15% on the year.
The new COVID-19 variant only added fuel to the fire in the last week of November. The Canadian stock market was already sliding when news broke of the new variant. With all the uncertainty surrounding this pandemic right now, it wouldn’t be a surprise to see the market end December at a loss.
As a long-term investor, I welcome short-term pullbacks, as it creates buying opportunities. Since early 2020, the Canadian market has had no shortage of volatility, and I don’t expect that to change anytime soon.
I’ve reviewed two Canadian tech stocks near the top of my watch list this month. If the market continues to decline, I’ll be looking to pick up some discounted shares of these two companies.
Tech stock #1: Descartes Systems
Down 10% from all-time highs, I’ll be closely watching Descartes Systems (TSX: DSG)(NASDAQ: DSGX) in December. Even with the current discount, shares of the Canadian stock are still up more than 30% in 2021.
Many companies today are in dire need of software that Descartes Systems provides. The tech stock’s cloud-based solutions help support its customers throughout the entire supply chain management process. And with all the supply chain issues that companies across the globe have been dealing with throughout this pandemic, it’s not a surprise to see shares of Descartes Systems up over 100% since early 2020.
At a forward price-to-earnings ratio of 50, you’ll need to pay a premium to buy shares of this tech stock. Even with a steep price tag, though, I’m not going to wait long for a pullback to buy shares. The demand for supply chain management software is only increasing, which means more growth ahead for Descartes Systems.
Tech stock #2: Absolute Software
Down nearly 50% from all-time highs, this is a long-term play. I wouldn’t blame short-term investors for not having much interest in Absolute Software (TSX: ABST)(NASDAQ: ABST).
The Canadian stock initially rebounded incredibly well from the COVID-19 market crash early last year. The tech stock more than doubled from late March 2020 by the end of the year. Shares have been on the decline since February 2021, though, and are now down more than 20% this year.
You could argue that the tech stock got a bit ahead of itself in 2020 and has spent much of this year a correction. In the short term, especially if the market as a whole continues to slide, it could get worse before it gets better for Absolute Software. Over the long term, though, the company is well positioned in a growing industry.
Cybersecurity is one area of the market that I’m very bullish on. I’m already a shareholder of three different American cybersecurity stocks, and Absolute Software may be my portfolio’s next addition.
Absolute Software specializes in end-point security, which involves the protection of devices connected to different computer networks. Those devices could include hardware devices, data, or applications, to name a few examples. It’s not the most exciting niche, but it’s certainly a crucial one and, more importantly, a growing one.
If you have the time and patience to wait for this tech stock to rebound, I’d have it on your radar this month. Absolute Software is no stranger to delivering market-beating growth, and I don’t expect that to change anytime soon. In fact, I’m betting that the next decade will be much better than the last for the tech stock.
