After taking a hit in 2022, top Canadian tech stocks rebounded in 2023. While economic uncertainty continues to pose challenges for these companies, the moderation in inflation hints about a pause in interest rate hikes, thus supporting the further recovery in tech stocks.
However, investors should note that tech stocks are highly volatile, and short-term headwinds could limit the upside potential. Thus, investors with a long-term view and appetite for risk should consider capitalizing on the lower share prices of technology companies.
Against this backdrop, let’s look at three Canadian stocks from the tech sector to buy right now.
Shopify
Shares of the Canadian e-commerce platform provider Shopify (TSX: SHOP) have gained over 36% year to date. The recovery comes on the back of the company’s ability to drive its revenue despite a challenging year-over-year comparison and ongoing headwinds. Furthermore, the easing of inflation contributed to its recovery.
While Shopify stock has shown a bit of recovery, it trades at a next-12-month (NTM) enterprise value (EV)-to-sales multiple of 9.5, which is much lower than its pre-pandemic levels, providing an opportunity to go long.
While the near-term pressure on consumer spending could hurt Shopify’s financials in the coming quarters, the company is poised to deliver robust capital gains in the long run, reflecting benefits from the ongoing digital shift, higher e-commerce penetration, and its innovative product launches.
Shopify’s innovative products, like Payments, Capital, and Market, have witnessed solid adoption and augur well for growth. Moreover, its expansion into new geographies, strengthening of fulfillment offerings, and opportunities in the offline payments space will likely support its growth.
Nuvei
Like Shopify, Nuvei (TSX: NVEI) stock witnessed a recovery and has jumped about 60% year to date. While shares of this financial technology company marked a rebound, it is still trading at an NTM EV-to-sales multiple of 4.3 compared to its historical average of 14.5.
While Nuvei stock looks attractive on the valuation front, its volumes are growing at a decent pace, which supports my bull case. Meanwhile, the expansion of alternative payment methods on its platform augurs well for growth.
Nuvei continues to invest in sales and distribution. Meanwhile, new product launches, cross and up-selling opportunities, and expansion into new geographies will likely accelerate its organic growth. In addition, Nuvei’s focus on strategic acquisitions will likely expand its addressable market, strengthen its competitive positioning, and accelerate its growth rate.
Kinaxis
So far, Kinaxis (TSX: KXS) stock has gained about 24% this year. It provides cloud-based, software-as-a-service (SaaS) solutions focusing on the supply chain. Despite pressure on enterprise spending amid a challenging macro backdrop, the momentum in its business has sustained, reflected through the rise in revenues on the back of a growing customer base.
As Kinaxis is benefitting from new customer wins, the company’s management remains optimistic and expects the momentum to sustain due to high demand. Its growing annual recurring revenue, incremental bookings, high renewal rates, and strong backlog provide a solid foundation for future growth.
Furthermore, the improvement in enterprise spending on supply chain management in the long term will likely drive its growth. Kinaxis stock trades at an NTM EV-to-sales ratio of 8.7, reflecting a significant discount from its historical average and providing a good entry point.
