The surge in shares of Shopify (TSX: SHOP) has been difficult to ignore, with the e-commerce giant storming out of the gate following its latest earnings result. Indeed, the results came in much better than expected. Other developments also helped drive investors back into the stock.
Even after the recent run, Shopify stock is nowhere close to hitting its all-time highs. However, buying any stock after a more than 30% move can be a recipe for steep and painful losses, as many euphoric investors may have found out in 2022.
Personally, I’m not inclined to chase Shopify stock as it continues adding to its gains. While I think Shopify, the business, looks in much better shape with more clarity on its game plan, I can’t say I’m enthused to be paying a 30% markup in just a few trading sessions.
Shopify stock is looking quite overbought!
The stock looks way overbought here and may be better to watch than buy at this juncture. That said, if you already own it, I’m not against hanging on. Shopify is still one of the most attractive growth stories in Canada, after all, and it’s difficult to gauge how much room to run the stock has.
In this piece, we’ll look at two alternative Canadian tech stocks that aren’t nearly as hot and may be a better value at current levels. Without further ado, please consider Lightspeed Commerce (TSX: LSPD) and Nuvei (TSX: NVEI).
Lightspeed Commerce
Lightspeed Commerce stock is down more than 87% from its peak hit back in 2021. Undoubtedly, the tech-driven innovator took an even larger hit to the chin. Though it’s hard to tell when shares will begin to stage a rebound, I think there’s already so much pessimism baked in here. In February, the firm reported a steeper-than-expected loss of US$814.8 billion. In a rising-rate world, such a result is not going to help spark a recovery.
Macro headwinds have weighed, and as a recession moves in, it’s hard to say how future quarters will stack up. In any case, I think expectations have been lowered across the board. Further, I expect the firm could look for ways to improve its financial position as the market waters become rockier.
The firm laid off 300 employees earlier this year. Despite this, Lightspeed still seems very much in growth mode, with previous plans to hire up to 200, as the company looks to better cater to its premium clientele. At just 3.1 times price to sales, LSPD stock stands out as a relative bargain compared to the likes of Shopify.
Nuvei
Nuvei is a digital payments company that also lost more than 80% of its value from peak to trough. Year to date, NVEI stock has been a choppy mover but remains up more than 40%. Shares of the firm recently sagged lower, as investors punished it for a guiding to a $300-308 million in second-quarter revenue.
At around seven times price to sales, Nuvei stock isn’t exactly an expensive growth play anymore. Still, tougher sledding could be ahead, as the recession continues to weigh on consumer spending. Personally, I’m more inclined to wait and see how the next quarter goes, rather than looking to catch a bottom in the ultra-volatile (2.77 beta) play.
