The global equity markets have turned volatile this month, with the S&P/TSX Composite Index falling over 4%. Weak Chinese economic numbers and growing concerns over the United States banking sector appear to have increased volatility in the equity markets. Meanwhile, the correction has provided an excellent buying opportunity in the following three tech stocks. All three could deliver superior returns over the longer horizon.
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WELL Health Technologies
WELL Health Technologies (TSX: WELL) is a digital healthcare company that develops products and services to allow healthcare practitioners to offer omnichannel services. Earlier this month, the company reported impressive second-quarter performance. Its revenue and adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) to shareholders grew by 21.8% and 16.2%, respectively. The company had over 1 million patient visits and 1.5 million patient interactions during the quarter.
Meanwhile, I expect the uptrend in the company’s financials to continue amid the growing adoption of telehealthcare services. With the development of innovative products and growing internet penetration, telehealthcare services are increasingly becoming popular. Notably, Meticulous Research projects the North American telehealthcare market to grow at a 22.8% CAGR (compound annual growth rate) for the rest of this decade.
Facing a growing addressable market, WELL Health is continuing with acquisitions to expand its footprint across North America. Besides, it has invested in developing artificial intelligence-powered tools that can improve productivity and enhance patient experience. Despite its healthy growth prospects, the digital healthcare company trades at an attractive NTM (next 12 months) price-to-sales multiple of 1.2, making it an attractive buy.
Nuvei
Second on my list would be Nuvei (TSX: NVEI), which accelerates the growth of its clients by facilitating next-gen transactions. The growth in e-commerce has led to increased adoption of digital payments, thus expanding the addressable market for the company. Meanwhile, the payment processing company is introducing new innovative products, expanding its product reach, and adding new alternative payment methods, which could boost its financials in the coming years.
Nuvei’s management projects its topline to grow at an annualized rate of 15%–20% in the medium term. It expects to invest around 4–6% of its revenue on capital expenditures. Besides, the management is confident of achieving an adjusted EBITDA margin of about 50% in the long run. Meanwhile, the company is under pressure this year amid weak second-quarter earnings and the lowering of 2023 guidance.
Amid the sell-off, Nuvei trades at 8.6 times projected earnings for the next four quarters, which looks cheap compared to its high-growth prospects.
BlackBerry
My final pick would be BlackBerry (TSX: BB), which offers cybersecurity and IoT (Internet of Things) solutions. The demand for IoT products and services is growing amid digitization. Meanwhile, Markets and Markets projects the global automotive IoT market to grow at a 19.7% CAGR (compound annual growth rate) for the next five years. Given the growth potential, the company is focusing on developing innovative products to strengthen its position in the market.
The company has also witnessed sequential revenue growth in the cybersecurity segment in the May-ending quarter amid solid performance from its core verticals. Meanwhile, the software firm is also strengthening its product offerings by introducing artificial intelligence-powered products. AI could support its growth in the coming quarters. Given its multiple growth drivers, I believe BlackBerry is well-positioned to deliver superior returns in the long run.
