The Canadian stock market offers investors a wide range of tech stocks to invest in. These companies can be very attractive due to their outstanding growth potential. At the top of the list, Shopify stands out as a company that all investors should hold in their portfolio. It’s currently one of the largest players in the rapidly growing e-commerce industry. If I had to guess, I would say that Shopify has a very strong chance of becoming an even larger company by the end of the decade.
Motley Fool readers familiar with my articles will know that I’m very bullish on Shopify. However, are there any other Canadian tech stocks that I’d consider buying before Shopify? The answer is yes. In this article, I’ll discuss that stock and why it’s so attractive.
What Canadian tech stock would I buy before Shopify?
Constellation Software (TSX: CSU) is one stock that I would consider buying before Shopify. In fact, I believe there’s an argument to be made that if you’re a new investor just starting out in the market, you should have Constellation Software in your portfolio. However, I think Shopify is a stock that investors should buy once they’ve become accustomed to the ups and downs that are associated with stocks over time.
The reason I think that is because Constellation Software acts more like a blue-chip stock than Shopify. By that, I mean although Constellation Software can outpace the market in returns (which I’ll get to later), it doesn’t tend to see the drastic pullbacks that Shopify stock does.
For those that are unfamiliar with Constellation Software, it’s a tech conglomerate. Constellation Software’s business focuses on acquiring vertical market software (VMS) businesses. After acquiring a business, Constellation Software will provide them with the coaching and resources necessary to become an exceptional business unit.
For most of its history, Constellation Software has focused on small- and medium-sized VMS businesses. That has proven to be a very successful strategy for this company. However, in 2021, the company announced that it would finally start targeting large VMS businesses for acquisition. Constellation Software’s president and founder, Mark Leonard, stated that this change could be a stumbling block for the company, as it adapts to the new endeavour. However, it could pay off massively in the future.
Where could Constellation Software stock be in the future?
Since its initial public offering in 2006, Constellation Software stock has gained more than 12,300%. That represents a compound annual growth rate of more than 30%. In 2022, Constellation Software was affected by the same pullback that hindered the growth of many tech stocks across the globe. However, its pullback wasn’t nearly as bad as most companies experienced, with Constellation Software stock only falling about 25%. Since then, the stock has rallied more than 20% and returned to all-time highs.
With its founder, Mark Leonard, continuing to lead the company as its president, I’m confident that Constellation Software could continue to outpace the market over the coming years. If you’re looking for a blue-chip stock with massive growth potential, Constellation Software is a tech stock I’d recommend looking at, even before Shopify.
