The collapse of cryptocurrency exchange FTX in early November 2022 harmed cryptos. However, Bitcoin is up 46.4% year to date, and some investors say the largest crypto trades like a tech stock.
Meanwhile, the technology sector suffered a severe selloff last year but is doing better thus far in 2023 with a +13.55% positive gain. But if I were to choose between tech stocks and any other crypto, I wouldn’t touch the latter with a 10-foot pole.
Tech firms like Descartes Systems Group (TSX: DSG), Kinaxis (TSX: KXS), and Docebo (TSX: DCBO) are safer and certainly have more potential. They have financials and business projections to show.
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Solid platform for growth
Descartes provides on-demand, Software-as-a-Service (SaaS) solutions to logistics-intensive businesses to help them improve productivity, performance, and security. The $8.76 billion company reported impressive top- and bottom-line growth in fiscal 2023.
In the 12 months that ended January 31, 2023, revenue and net income increased 14.4% and 18.4% to US$486 million and US$102.2 million versus fiscal 2022. Edward J. Ryan, Descartes’s chief executive officer (CEO), said the company invests in its Global Logistics Network. He added, “We invest both organically and through acquisitions consistent with customer feedback on how we can deliver more value to them.”
For fiscal 2024, management anticipates adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) to be 40-45% of revenues. Its chief financial officer Allan Brett said Descartes has a solid platform for continued growth and acquisitions. Moreover, it has the experience and capital capacity to add more solutions for the growing community of shippers, carriers, and logistics services providers. At $102.95 per share, current investors enjoy a 9.07% year-to-date gain.
Increased profitability
Kinaxis had an incredible turnaround in 2022, exceeding total revenue and adjusted EBITDA targets. Also, besides growing its customer base by 40%, profit reached US$20.08 million compared to the US$1.16 loss in 2021.
This $4.59 billion supply chain management company will continue to invest for the long term and cement its leadership position. Management also expects faster SaaS growth and increased profitability in the coming years.
Performance-wise, the tech stock is up 10.24% year to date. Market analysts covering KXS recommend a buy rating. The 12-month average price target is $218 — a potential 30% appreciation from its current share price of $167.46.
This $4.59 billion supply chain management company will continue to invest for the long term and cement its leadership position. Management also expects faster SaaS growth and increased profitability in the coming years.
Focus on long-term growth
Docebo endured the macroeconomic headwinds in 2022 and delivered a strong performance. The $1.68 billion company boasts a leading artificial intelligence (AI)-powered learning platform. In the 12 months that ended December 31, 2022, total revenue (subscription and professional services) climbed 37% year over year to US$142.91 million.
The net income topped US$7 million compared to the US$13.6 million net loss in fiscal 2021. Claudio Erba, Docebo’s founder and CEO, said, “Our focus remains on driving long-term growth and profitability across economic cycles, supported by continued innovation.” If you invest today, the share price is $51.08 (+14.2% year to date).
No predictable path
While Bitcoin and other cryptos are tradable assets like tech stocks, they still lack regulation. More importantly, there’s no predictable path for the foreseeable future, unlike Descartes, Kinaxis, or Docebo.
