The TSX IT Index rose over 15% in the last half of March, and though it seemed like the growth momentum might carry the sector forward, it hasnāt happened yet. The index fell down about 18% this year alone, and we are only a quarter in. And many amazing tech stocks have fallen much harder than the sector at large, which gives you the chance to buy them at a discounted price.
A U.S.-based tech company
Ceridian HCM Holding (TSX:CDAY)(NYSE:CDAY) is based in Minnesota, U.S., and cross-listed in Canada. The holding company is built around the flagship cloud-based HCM platform called Dayforce.
This HCM software, while not comparable to giants like SAP or Microsoft, is at least in the pie and among the 10-largest HCM software around the globe. Itās used by and offers solutions to a variety of industries, including healthcare and retail.
The stockĀ has been a powerful grower since it joined the TSX in 2018, and before the pandemic crash, the stock grew by about 155%. Its post-pandemic growth has been quite steady and comparatively “paced” as well. And since the stock didn’t go up at an unsustainable, its fall has also been lower than many others. However, it has still dropped about 33% in 2022.
A small-cap software company
With a market cap of $465 million, Tecsys (TSX: TCS) is the smallest company on this list. The company focuses on supply chain solutions, and instead of one consolidated product/solution, it has three different proprietary solutions for three different industries/business classifications: enterprise, healthcare, and retail. Its service portfolio includes implementation, cloud, and advisory.
Tecsys is quite an old stock, and it has spent almost the entire last decade (2002 to 2012), with its price point languishing between $1 and $2.5. But the last three years have been especially empowering for the stock, and it grew over 380% in 2019 and 2020 alone, though it has massively declined from its 2021 peak. The bulk of the slump has been in 2022 (over 40%).
A legal technology company
Dye & Durham (TSX: DND) offers a powerful overlap of the legal industry and technology. It offers solutions to three industries in particular — legal, government, and financial services — thanks to the platformās focus on compliance and public records. It also focuses on three specific geographic markets: Canada, the U.K., and Australia.
It’s the youngest stock on this list. The company only started trading on the TSX in 2020, and it has already seen a sizeable ascent and a correction phase, which has pushed the stock down 40% in 2022 alone. The discount, and the fact that it has an extensive network of professionals associated with its platform, make it a smart buy for future growth potential.
Foolish takeaway
While all three are heavily discounted, they are not undervalued stocks. But waiting for the stocks to become undervalued before buying will most likely take away the discount they are currently offering and the powerful recovery-fueled growth potential along with it.
