The Market Is Ignoring These Under-the-Radar Canadian Tech Stocks, but I’m Not

Buying stocks that the market is largely ignoring can be a powerful investment move if the stocks start soaring.

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The year 2023 has been great for the Canadian tech sector. The index has steadily climbed 35% in the year (so far), and many of the tech stocks are already emulating the bullish performance of the index.

But not all stocks are getting the same level of attention from investors, and while some of them are attracting a lot of capital, others are flying under the radar. You might consider looking into two promising prospects from this overlooked pool.

An electronics design and manufacturing company

Celestica (TSX:CLS) offers end-to-end consultation and services to various tech manufacturers. This covers multiple phases between design and supply chain/distribution. The company even offers after-market services on behalf of its clients. This diverse range of services puts the company in a strong position.

Many tech companies and even manufacturers specialize in certain areas of product development and distribution, and a company like Celestica that does it all can fill the gaps for these companies.

 The company and the stock peaked about two decades ago when the market value of the company was over six times its current value. The stock has stabilized over the years, but its growth hasn’t mimicked the characteristic growth of the tech sector.

Even its 2023 growth is falling short of the index. But it’s currently among the modestly undervalued stocks in the tech sector, which may give this under-the-radar stock an edge if the tech bull market continues.

A supply chain technology company

Modern supply chains have become increasingly complicated, especially when navigating them without the right tools, and Kinaxis (TSX:KXS) is one of those tools. It’s an end-to-end supply chain orchestration platform that allows platform users to manage their entire supply chain from a unified source.

This makes the supply chain more visible and transparent. The data-driven platform also incorporates artificial intelligence (AI) and other advanced technologies, and these integrations can make decision-making significantly easier and more potent.

Kinxas stock experienced exceptional growth in less than a decade – 1,500% in roughly six and a half years. However, during the correction after the pandemic and at its worst, the stock fell over 42%. But now it has started recovering, and even though its progress has been slower than many other constituents of the tech sector, it may accelerate in the future, assuming the tech sector bull market continues.

One weakness of the stock is its valuation. The stock is currently among the most overvalued stocks, not just in the sector but in the Canadian market at large.

Foolish takeaway

The two tech stocks are not among the top picks from the sector, and even though they have the investor’s attention, the scale of that intention is not comparable to that of the top tech sector picks. This makes them under-the-radar choices that may offer compelling long-term performance.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends Kinaxis. The Motley Fool has a disclosure policy.

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