Technology stocks, which had witnessed strong buying during the pandemic, have been under pressure since September. Expensive valuations, growth moderation due to the reopening of the economy, rising inflation, and an expectation of multiple interest rate hikes have pulled these stocks down. Some of the technology stocks have corrected above 70%. However, the pullback has provided buying opportunities in the following three stocks, which offer excellent long-term growth potential.
Shopify
First on my list is Shopify (TSX: SHOP)(NYSE:SHOP), which offers an essential infrastructure to start, grow, market, and manage retail businesses. Amid the weakness in growth stocks, the company trades at over a 67% discount from its November highs. The correction has dragged its price-to-earnings multiple down to 25.3.
The e-commerce growth has expanded the addressable market for Shopify. Meanwhile, expanding product offerings, venturing into new markets, increasing its customer base, and strengthening its fulfillment networks could help the company take advantage of a growing market. The company is planning for a 10-for-1 stock split, making it accessible to a range of investors. So, I believe the correction provides an excellent buying opportunity for long-term investors.
Analysts are also bullish on the stock. Of the 36 analysts that cover the stock, 20 have issued a buy rating. Their consensus price target represents an upside potential of 97%.
BlackBerry
My second pick is BlackBerry (TSX: BB)(NYSE: BB), which specializes in cybersecurity solutions. Amid digitization and increased remote working and learning, the spending on cybersecurity solutions is rising, benefiting the company. Meanwhile, BlackBerry is expanding and enhancing its product offerings and adding sales representatives to drive growth.
Meanwhile, the company has been increasing its presence in the QNX business by strengthening its safety-critical foundation software, such as advanced driver-assist, digital cockpits, and autonomous drive. It had a record 35 design wins in the last quarter. The company is receiving several requests to start proof-of-concept for its IVY platform, which could be a significant growth driver in the coming years. So, its outlook looks healthy.
However, amid lower-than-expected fourth-quarter performance, a decline in its annual recurring revenue, and sectoral weakness, the company is trading over 65% lower than its 52-week high. Given its growth potential, I am bullish on BlackBerry.
Nuvei
Nuvei (TSX: NVEI)(NASDAQ: NVEI) is a global payment technology company that services merchants across 200 markets and supports local and alternative payment technologies, including cryptocurrencies. The growth in e-commerce has made digital payments popular, expanding the addressable market for the company. Meanwhile, Nuvei is expanding its presence to new markets, increasing its product offerings, adding new alternative payment methods, and making strategic acquisitions to drive growth.
Further, the growing crypto transactions and the expansion of its service in the regulated online gaming and sports betting space have also created a multi-year growth potential. Given these multiple growth drivers, Nuvei’s management expects its volumes and revenue to grow above 30% in the medium term while generating an adjusted EBITDA margin of over 50% in the long run.
Despite its high-growth potential, Nuvei currently trades at a discount of over 50% from its September highs. So, I believe investors with a long-term investment time frame can accumulate the stock to reap higher returns.
