Continued macroeconomic challenges, including inflationary pressures and a higher interest rate environment, have reignited the Canadian stock market selloff in September 2023, especially in growth stocks. The U.S. Federal Reserve, in its latest economic projections, suggested that inflation and interest rates might remain elevated for a longer period than earlier expected. This is one of the key reasons why the S&P/TSX Composite Index has seen more than 8% value erosion in September so far.
While the stock market downtrend might make new investors nervous, experienced investors tend to utilize it as an opportunity to buy their favourite growth stocks at a big bargain. Buying some fundamentally strong growth stocks cheap and holding them for the long term has the potential to significantly boost your returns on investments.
In this article, I’ll highlight two really attractive high-growth Canadian tech stocks you can consider buying at a bargain amid the market selloff.
Lightspeed stock
If you don’t know about it already, Lightspeed Commerce (TSX:LSPD) is a one-stop commerce platform provider headquartered in Montréal. The platform aims to help merchants globally easily scale their business and improve their customers’ experiences. The company currently has a market cap of $3 billion as LSPD stock trades at $19.02 per share after losing nearly 14% of its value in September so far due mainly to the recent broader market declines.
The ongoing growth trend in Lightspeed’s financials looks healthy as the company has been exceeding Street analysts’ bottom-line expectations for the last five consecutive quarters. In the first quarter of its fiscal year 2024 (ended in June), the tech firm posted a double-digit 20% YoY (year-over-year) increase in its total revenue to US$209.1 million, despite macroeconomic challenges due mainly to a solid 32% jump in its transaction-based revenue. With the help of this strong sales growth, Lightspeed posted an adjusted net quarterly loss of US$2.2 million, significantly less than its adjusted net quarterly loss of US$17.6 million a year ago and also much better than analysts’ estimate of a US$8.6 million loss.
Although economic difficulties might hamper its financial growth in the short term, Lightspeed remains on track to achieve sustainable profitability in the coming years with its consistently expanding global presence and focus on growing revenue from financial services.
Kinaxis stock
Kinaxis (TSX:KXS) is another Canadian growth stock that has been hit hard by the recent market selloff. After rallying by more than 38% in the previous three quarters in a row, KXS stock has seen 21.2% value erosion in the September quarter so far to currently trade at $149.12 per share, trimming its market cap to $4.3 billion.
This company primarily focuses on providing supply chain planning and management solutions to businesses across the world. In the second quarter, Kinaxis posted a strong 31% YoY increase in its total revenue to US$105.8 million, along with an impressive number of customer wins. More importantly, its adjusted quarterly earnings of US$0.25 per share reflected a handsome 78.6% YoY positive growth.
Overall, Kinaxis’s ability to continue delivering strong financial growth even in a difficult economic environment makes this Canadian growth stock look undervalued after recent declines.
