Thanks to the increasing use of artificial intelligence (AI) and machine-learning applications for streamlining supply chains, the tech sector is witnessing another rise. However, it can be a tough decision for investors to bet on the future performance of a sector that went through massive overvaluation during the pandemic.
Under these circumstances, many previous high-flying stocks have become much more under the radar in the sense they don’t get the attention they once used to. The three stocks I’m going to highlight are all household names, but ones I think many investors may have pushed further down the watch list recently.
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Shopify
Shopify (TSX: SHOP) is one of Canada’s largest e-commerce platforms. It allows merchants to showcase and sell their products via multiple sales channels. Apart from its home country, this company operates in the U.S., Latin America, the Middle East, Africa, Asia, and the Asia Pacific.
Shopify’s superb financial performance was on full display in the first quarter (Q1) of 2023. The company’s monthly recurring revenue increased 10% year over year, with revenue surging to US$116 million. The organization’s total revenue also appreciated to US$1.5 billion, showing a 25% increase from Q1 2022.
Apart from this, Shopify launched a ChatGPT-powered shopping assistant that provides relevant suggestions based on customers’ buying patterns. Given the surge in interest around AI, one would think that Shopify would generate more buzz than it has. But for now, the company’s reputation as an e-commerce play may be holding this stock back, which is saying something, given its robust year-to-date performance thus far in 2023.
Constellation Software
Constellation Software (TSX: CSU) is a company that deals in developing, marketing, and distributing mission-critical software solutions. It is a Canadian software giant (one of the few), with the majority of its sales coming from other key markets, namely the U.S. and Europe.
This company has posted remarkable results in this year’s first quarter. Constellation had 34% revenue growth in comparison to Q1 2022, with the figure standing at US$1.9 billion. Furthermore, the organization’s cash flow from operations was US$632 million, indicating a 27% rise.
Additionally, Constellation has completed the acquisition of Winklevoss Technologies via its Perseus Group, as of mid-May. Winklevoss is a leading organization that provides administration software solutions along with defined-benefit pension plans. Thus, the acquisition of this company has surely enhanced Constellation Software’s share in the Canadian tech sector.
Meta Platforms
Meta Platforms (NASDAQ: META) develops platforms that allow users to connect on various virtual social networks. Some of its world-renowned products are Facebook, WhatsApp, and Instagram, which have billions of users worldwide.
Like its peers on this list, Meta has performed exceptionally well this year (or at least, better than expected). While revenue growth came in light at 3%, the company’s focus on efficiency and move away from discussing the metaverse at every turn has investors excited.
The company is a massive player in the social media space and has plenty of upside potential long term. For those bullish on growth re-accelerating over time, this is a stock to watch.
I think the company’s solid core social media business provides the backbone to fund future growth initiatives. The market has frowned upon the company’s metaverse ambitions thus far. But if they pan out, this is a stock that’s very undervalued here.
