The Canadian stock market offers investors a plethora of outstanding companies to hold in a portfolio. Some of those companies, particularly coming from the tech sector, have shown the potential to generate life-changing amounts of wealth.
For example, Shopify (TSX:SHOP) has shown at times that it can be one of the best stocks to hold in a portfolio for years. However, not everyone has been very happy with Shopify stock as of late, with the stock dropping significantly in value in 2022. That’s why many investors are looking for options outside of Shopify that could help them generate massive amounts of wealth. In this article, I’ll discuss one Canadian tech stock that I’d buy before Shopify today.
What stock would I buy before Shopify?
If there were only one tech stock I could buy today, it would be Constellation Software (TSX:CSU). For those who aren’t familiar, Constellation Software is a tech conglomerate. This company acquires vertical market software (VMS) businesses. Upon acquisition, it provides those businesses with the resources necessary to turn them into exceptional business units.
For most of its history, Constellation Software has focused on small- and medium-sized VMS businesses. This strategy worked very well for the company for decades — so much so that Constellation Software needed to start being wary of copycat companies that could pose a competitive threat to its business. In 2021, the company announced that it would be making a major change to its business, finally creating a division that focuses on large VMS businesses for acquisition.
How has this stock performed?
Since its initial public offering (IPO), Constellation Software has been one of the best stocks to hold on the TSX. As of this writing, Constellation Software stock has gained nearly 17,000%! In other words, if you had invested $10,000 in this company around the time of its IPO, you’d be a millionaire today.
Constellation Software is also known for being a very resilient stock. In 2022, when many tech and growth stocks were losing 50% or more of their value, Constellation Software stock only lost about 22%. Since hitting its lowest point that year, the stock has gained more than 70%, reaching new all-time highs once again. Over the past year alone, Constellation Software has gained nearly 55%.
What should investors watch out for?
In my opinion, the biggest thing that investors should keep an eye on is Constellation Software’s president, Mark Leonard. He founded the company back in the 1990s. In my opinion, as long as Leonard is involved in Constellation Software, the company should have solid leadership and could continue to grow at a steady pace. However, if he ever decides to retire, it could spell disaster for the stock, as many shareholders could become uncomfortable with the new direction.
The Canadian stock market offers investors a large number of tech stocks to invest in. Although Shopify is one of the most popular names on the market, there are other stocks like Constellation Software that may be worth considering first.