1 Tech Stock That’s Still Strong, Even During Today’s Market Correction

Constellation Software (TSX:CSU) has to be the best deal among tech stock companies on the TSX today. Analysts continue to increase their target prices.

| More on:
Young woman sat at laptop by a window

Image source: Getty Images.

Today’s market correction has been especially hard for tech stocks. But there is one tech stock that, although not immune, continues to be stronger than the rest. That stock, is Constellation Software (TSX:CSU).

Constellation stock has a strong business model that’s seen it grow steadily, not just during the past few turbulent years, but for decades. And now is a great time to get hold of a stake before the market increases again. Let’s go over a few reasons why this could be the best tech stock on the TSX today.

The business model

Constellation stock has grown over the past few decades to be the acquisition play of all the tech stock companies. Growing 8,375% over the past 15 years, it’s become a machine whose employees know exactly what software-as-a-service companies are worth investing in.

The tech stock and its subsidiaries acquire, build, and manage software business around the world, both in the public and private sector. And it’s proven time and again that any downturn will be returned multiple times over. And that includes today.

Analysts agree

Today’s painful selloff is a buying opportunity for this tech stock that analysts don’t think you should pass up. Most recently, CIBC World Markets analyst Stephanie Price weighed in on the industry, including Constellation stock on the TSX today. Price stated overall, there is an increasing demand for digitization and cloud solutions. That isn’t going away, no matter what happens with the pandemic.

“With higher inflation expected to pull forward the timing of key central bank rate hikes, there was downward pressure on the higher-growth technology names at the end of the year, pressure that is likely to continue into 2022,” said Price. “Further, many of the individual equities whose share prices benefitted most from the pandemic in 2020 were tech names that experienced some level of price correction in 2021.”

But that leaves an opportunity for investors on the TSX today. In fact, Price increased her target price for the tech stock from $2,400 to $2,900, maintaining an outperformer rating. That’s a potential upside of 43% as of writing!

Bottom line

Constellation stock is the tech stock everyone should have in their portfolio, if they can afford it. It’s been a solid growth stock over the last decade or more, and that’s not likely to change. Further, it has substantial cash on hand that should help during this downturn. Now is a great opportunity for mergers and acquisitions, and that’s where the company thrives.

So, while earnings may suffer in the short term, in the long term, Constellation has solid fundamentals and a business plan that can stand the test of time. If you’re looking for a deal, this tech stock is definitely the one I’d buy hand over fist — especially if you’re an investor on the TSX today looking for a long-term option in your growth portfolio.

Constellation stock trades at $2,030 as of writing, with a consensus target price of $2,500. That’s a potential upside of 23% as of writing.

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 Amy Legate-Wolfe owns CANADIAN IMPERIAL BANK OF COMMERCE. The Motley Fool recommends Constellation Software.

More on Tech Stocks

Wireless technology
Tech Stocks

3 Tech Stocks Worth Buying Today

Looking for tech stocks to add to your portfolio? Here are three top picks!

Read more »

Question marks in a pile
Tech Stocks

Should Canadians Be Worried About the Snapchat Stock Plunge?

Social media stocks lost US$180 billion in value on Tuesday, as shares of Snapchat (NYSE:SNAP) stock dropped by 41%, below…

Read more »

Tech Stocks

Is Lightspeed (TSX:LSPD) Still a Buy After its Huge Q4 Loss?

The e-commerce investments in Canada have taken a turn for the worst, which is either a signal to stay away…

Read more »

Hand holding smart phone with online shop concept on screen
Tech Stocks

Forget Bitcoin: Shopify Is a Growth Stock That Could Correct Upwards

Shopify (TSX:SHOP)(NYSE:SHOP) stock looks to have a better risk/reward scenario than the likes of Bitcoin or any other cryptocurrency in…

Read more »

edit Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.
Tech Stocks

1 IoT Solutions Provider Could Outperform BlackBerry (TSX:BB)

Technology stocks underperform in 2022, although one IoT solutions provider is a screaming buy compared to a former smartphone maker.

Read more »

Growing plant shoots on coins
Tech Stocks

2 Growth Stocks Available at Discounts: Should You Buy?

Canadian growth stocks in the tech sector are trading at considerable discounts from their pre-pandemic valuations, and these two might…

Read more »

TSX Today
Tech Stocks

TSX Today: What to Watch for in Stocks on Tuesday, May 24

Top bank earnings could keep the banking sector volatile on the TSX this week.

Read more »

Double exposure of a businessman and stairs - Business Success Concept
Tech Stocks

Is Now the Time to Buy Shopify (TSX:SHOP) and 1 More Beaten-Down Stock?

These tech companies have strong fundamentals and are well positioned to benefit from ongoing digital shift.

Read more »