Growth investors didn’t have much to cheer about in 2022. The Canadian stock market as a whole lost close to 10% last year, with many TSX stocks falling far more than that.
Growth stocks, particularly in the tech sector, felt the brunt of the selling in 2022. But with a fresh start to a new year, there seems to be a heightened level of optimism that we haven’t felt in a while.
The S&P/TSX Composite Index jumped more than 5% in January, getting many investors excited about the possibility of a rebound year in 2023.
Investing ahead of a potential market rebound
With that in mind, I’m making sure that my watch list remains up to date as much as possible. The fire-sale prices that were easy to find in 2022 may not be around for much longer. With a hot start to the year, we’re already seeing many TSX stocks well on the way to returning to all-time highs.
I’ve reviewed two tech stocks at the top of my watch list right now. Both companies are near all-time highs, so if you’re looking for a bargain, you may want to look elsewhere. But if you’re interested in earning dependable market-beating returns, you’ll want to have a closer look at these two tech companies.
TSX stock #1: Constellation Software
After a 10% surge in January, Constellation Software (TSX: CSU) is trading just shy of its all-time high today.
Shares are up close to 200% over the past five years. In comparison, the broader Canadian stock market has returned just over 30%.
Believe it or not, Constellation Software’s nearly 200% return over the past five years is actually a slowdown in growth for the tech company. Having gone public close to 20 years ago, Constellation Software is far past its unprofitable high-growth days. As a result, growth has slowed but still continues to largely outpace the broader market’s returns.
Today, the company is a cash-generating machine that’s as dependable as they come for growth investors.
With many tech stocks on the TSX trading at discounts, investing in Constellation Software while it’s trading at an all-time high may not seem that enticing. However, the tech stock’s track record speaks for itself.
Growth investors looking to limit the amount of risk they’re taking in 2023 should seriously consider this top tech company.
TSX stock #2: Descartes Systems
Descartes Systems (TSX: DSG) was one of the few tech stocks that managed to remain on par with the market’s return last year.
Shares have been riding a steady bull run that began more than half a year ago. Today, the tech stock is trading just 10% below all-time highs set in late 2021.
Descartes Systems has put up similar returns to Constellation Software over the past five years, with gains of close to 200%.
Demand for the company’s cloud-based supply chain management software has rapidly risen since the start of the pandemic. With the sudden changes in consumer behavior that started in early 2020, the software that Descartes Systems provides for its global customers became that much more important.
At a market cap below $10 billion, this is a company still largely in its growth phase. Shares may be priced near all-time highs, but this is a growth stock poised for many more years of market-crushing gains.
