The S&P/TSX Capped Information Technology Index was down marginally in early afternoon trading on Monday, June 19. Shopify (TSX: SHOP) is an Ottawa-based commerce company that provides a commerce platform and services in North America and around the world. This stock proved to be one of the most explosive on the North American market in the second half of the 2010s. While Shopify has regained momentum in 2023, I’m looking to a different Canadian tech stock right now. Let’s jump in.
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Why I’m looking beyond Shopify stock today
Shares of Shopify have jumped 5.2% month over month at the time of this writing. The stock has soared 75% so far in 2023. That momentum has attracted significant interest among short-sellers in recent weeks.
Shopify surged after a quarter that saw it post solid earnings and move forward with a batch of layoffs. This appeared to please the market, but the company still has significant challenges ahead as it looks to expand its international reach.
Here’s a tech stock that is worth getting excited about on the TSX
Enghouse Systems (TSX: ENGH) is the tech stock I’m looking to snatch up over Shopify in the second half of June 2023. This Markham-based company is engaged in the development of enterprise software solutions to a worldwide client base. Shares of this tech stock have dropped 11% month over month at the time of this writing. That has pushed the tech stock into negative territory in the year-to-date period.
This company released its second-quarter (Q2) fiscal 2023 earnings on June 12. In Q2 2023, Enghouse posted revenues of $113 million compared to $106 million in Q2 fiscal 2022. The company posted revenue growth on the back of positive foreign exchange and on the strength of recent acquisitions. Indeed, revenue rose to $219 million in the first half of the fiscal year, which was up marginally from $217 million in the first half of fiscal 2022.
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) fell to $30.2 million over $33.8 million in the prior year. On a per-share basis adjusted EBITDA came in at $0.54 — down from $0.61 in Q2 fiscal 2022. Enghouse Systems also posted a year-over-year decline in net income due to an increase in incremental operating costs that were related to recent acquisitions. Moreover, the company was forced to eat third-party costs as well as additional special costs related to acquisitions.
Should you buy this tech stock today?
This tech stock currently possesses a favourable price-to-earnings (P/E) ratio of 21. Relative Strength Index (RSI) is a technical indicator that measures the price momentum of a given security. Enghouse Systems stock last had an RSI of 33 and dipped below the 30-point mark late last week. This puts the tech stock on the edge of technically oversold territory at the time of this writing.
Enghouse Systems last announced a quarterly dividend of $0.22 per share. That represents a 2.6% yield. This tech stock boasts an immaculate balance sheet and is geared up for strong earnings growth going forward.
