The Canadian tech sector has seen a massive crash in 2022. In the first quarter, investors became worried about high inflation and many high-flying tech stocks being overvalued after their sharp gains during the pandemic phase. That’s one of the key reasons why the shares of most tech companies posted big losses in the first half of this year.
Tech recovery
Nonetheless, some fundamentally strong tech stocks seem to be gradually regaining investors’ confidence, as central banks in Canada and the United States continue to take aggressive policy measures to tame inflation. In addition, investors’ high expectations for the upcoming tech earnings season could lead to a tech sector-wide recovery.
Given that, it could be the right time for investors to consider adding some cheap but fundamentally strong tech stocks to their portfolios before it’s too late. Let me highlight two of the best TSX tech stocks you can consider buying for the long term this week.
BlackBerry stock
BlackBerry (TSX:BB)(NYSE:BB) has been on my radar for a long time now. The shares of this Waterloo-based tech company currently trade at $7.50 per share with about 36% year-to-date losses. On the positive side, this TSX tech stock has seen more than a 9% recovery in July so far.
In the May quarter, the company’s IoT segment (Internet of Things) revenue jumped by 19% YoY (year over year to around US$51 million as the demand for its security-focused tech solutions continues to surge in many industries. More importantly, its consistently growing efforts to expand its presence in the automotive technology space make its stock worth buying right now to hold for the long run.
Last week, BlackBerry and the Canadian software-as-a-service firm L-SPARK took another step in this direction by jointly announcing “the four winning companies that will make up the third cohort of their joint accelerator program, which aims to grow Canadian technology companies that are focused on connected vehicle technologies.” This announcement highlights the growing popularity of BB’s intelligent vehicle data platform IVY, which has the potential to exponentially accelerate its financial growth in the coming years. Given these positive factors, I find this TSX tech stock worth buying ahead of a big tech recovery.
Shopify stock
Shopify (TSX:SHOP)(NYSE:SHOP) has been one of the worst-performing tech stocks this year. The company is gearing up to announce its second-quarter results on Wednesday next week. While SHOP stock still trades with more than 75% year-to-date losses, it has seen a 7.3% recovery to $40.70 per share in July so far.
While the Canadian tech company’s sales growth rate is likely to decline this year compared to 2021 as the pandemic-driven surge in demand subsides, its long-term growth outlook continues to improve. Last month, Shopify partnered with American tech giants like Twitter and Google while announcing several new services for its merchants like Twitter Shopping and Local Inventory on Google.
These efforts clearly show Shopify management’s focus on product innovation to accelerate its financial growth. I expect such steps to help Shopify attract more merchants to its platform and expand its market presence further. That’s why I consider it one of the best and one of the most undervalued tech stocks on the TSX right now.
