This Tech Stock Rose 1,177% in 10 Years and Could Do It Again

This tech stock exploded during the pandemic when supply-chain issues persisted, but it’s now a great opportunity for value seekers.

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Tech stocks have gone through a rough go the last few years. While they all seemed to soar during the pandemic, they pretty much all went down and crashed after restrictions were lifted. Companies faced this challenge even if they didn’t deserve the drop in the least.

One company in this category is Kinaxis (TSX:KXS). Kinaxis stock soared upwards but has since fallen back, still down by 26% since peaking in November 2021. Even so, shares are up around 1,177% in the last decade as of writing. And that’s a number that could certainly repeat itself.

An essential tech stock

Essential tech stocks are hard to find, but Kinaxis stock is certainly one of them. The company is a supply chain management software company. It provides its software to enterprise-level companies, helping them with a streamlined approach that puts their products in the hands of consumers.

We’ve learned over the pandemic that creating a simple way to manage supply chains is indeed essential. Remember all those empty shelves no matter where you went? Those were supply-chain issues, and companies like Kinaxis stock were the ones to solve them.

In fact, during the pandemic the company helped other businesses with supply chain management issues, showing just how essential the company has become. But now that we’re through the worst of it, Kinaxis stock is becoming a top tech stock to consider once more.

Undervalued

Right now, Kinaxis stock is certainly undervalued, despite having a sky-high price-to-earnings (P/E) ratio. This comes from the company’s solid ground as the supply-chain management firm for enterprise companies around the world.

These incredibly large firms may make up the company’s portfolio, but there is never a company that takes up more than about 5% of the entire portfolio. This leaves the company closed off from experiencing major setbacks in the case that one of their clients leaves.

That means Kinaxis stock continues to have a stable stream of revenue from large firms across the world. And that’s something most tech stocks simply cannot claim in Canada: stability. Which is why earnings continue to be so strong.

Record growth

During the company’s second quarter earnings report, Kinaxis stock reported a record number of quarterly customer wins with a customer base of over 300. Its software-as-a-service revenue grew 25% as well, with annual recurring revenue up 22%.

Kinaxis stock was therefore able to reaffirm its forward guidance, with total revenue for full-year 2023 likely to be between US$425 and US$435 million. SaaS growth should also climb by between 25% and 27%, marking substantial gains for this year and beyond.

“We had a record number of customer wins, an increasing win rate against competitors, and the highest amount of incremental subscription business won in any second quarter in Kinaxis’ history…While we need to remain appropriately cautious about the global economy, we continue to see a persistent urgency to transform supply chain management practices. Siloed approaches are giving way to a concurrent, end-to-end orchestration model and Kinaxis remains alone in its ability to deliver on that vision.”

John Sicard, president and CEO of Kinaxis

So with a strong future ahead, and four-digit growth behind it, Kinaxis stock could certainly have a repeat in price movement in the next decade.

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 Amy Legate-Wolfe has positions in Kinaxis. The Motley Fool recommends Kinaxis. The Motley Fool has a disclosure policy.

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