The bull market may have begun, at least according to Mad Money host Jim Cramer, who used the term recently. Indeed, it didn’t take long for stocks to return to rally mode, more than a month before “Santa rally” season. Only time will tell how long this sharp bounce has to go. With enthusiasm over generative artificial intelligence (AI) and its ability to give the rest of the tech sector a lift (many tech firms want a piece of that AI pie!), I’d not be shocked if Santa comes to town, even after the spoils we’ve witnessed for the month of November.
Either way, Canadian investors should stay the course and stick with those “GARP” (growth at a reasonable price) types of stocks. The dirt-cheap bargains may be fewer and farther between. However, there are still plenty of high-growth plays for multiples that aren’t so absurd.
Bargain hunting in the Canadian tech scene ahead of a bull market
Indeed, they’re wonderful businesses that may be trading at pretty fair prices. And in the Oracle of Omaha’s playbook, such wonderful plays can be great buys, even if they’re not priced like cigar butts (battered deep-value stocks that may have just one or two puffs left in them).
Without further ado, let’s check out one intriguing tech stock that I think could still have room to run over the next 12-18 months. Consider shares of Kinaxis (TSX:KXS), a supply-chain management software developer that could leverage next-generation AI in a way to improve its platform by leaps and bounds.
Indeed, many companies stand to benefit from the long-term rise of generative AI. That said, Kinaxis stands out as having ample ground to gain as it looks to make its intriguing value-adding software that much better. Currently, Kinaxis is attempting to sustain a bounce after briefly hitting levels close to 52-week lows back in late October.
KXS stock: A better value after a steep slump
Despite the recent relief rally, the stock is still down around 30% from its all-time high of $213 and change per share hit back in 2020. Indeed, supply chain challenges are beginning to ease. But that doesn’t mean demand for Kinaxis software is bound to sink into the abyss from here. Arguably, more enterprises may wish to invest in the efficiency of their supply chains from here, as their budgets begin to improve after a rough year of spending cuts.
An analyst named Thanos Moschopoulos over at BMO Nesbitt Burns sees Kinaxis as a “better value” following its recent slump. I’m inclined to agree. The stock has “GARP” written all over it, in my humble opinion. Additionally, the company’s partnership with ProvisionAI could be a great combo that helps Kinaxis re-accelerate client additions over the coming years.
Kinaxis stock: What about valuation?
At 52.36 times trailing price to earnings, KXS stock looks anything but cheap. Still, given the magnitude of growth that could kick off on the other side of a recession (if it’s still on the table, that is!), I find the seemingly lofty price of admission to be well worth paying for.
