Tech stocks have gone through quite the rough last few years. It didn’t seem like anything bad could happen when you look back at 2020. After the March 2020 crash, investors around the world had cash on hand to invest, and no where to spend it. Enter tech stocks. Investors started using that cash to contribute to the growth of online, well, everything!
Yet when 2021 hit, the markets started to drop as pandemic restrictions came down as well. Then, tech stocks were kicked down further and further. So the question is, as the market recovers and looks to continue doing so, should investors get back into tech stocks once more?
Will any tech stock do?
In short, no. Tech stocks were climbing pretty much across the board a few years ago, and that’s not going to be the case going forward. In fact, even if we enter a bull market, investors have been burned before. Therefore, every single cheap tech stock is not going to rise.
Instead, investors should look for the companies that have shown strength over the last few years. Those that haven’t just survived, but thrived. The ones that have proven not just that there’s a growing opportunity among tech stocks, but that these tech stocks have proven to be essential!
Why Lightspeed stock?
You’ll notice that I didn’t include TSX darling Shopify (TSX:SHOP) on this list. However, there’s a reason for that, and it’s that it’s not cheap! Shopify stock is certainly a great option, but the market has already reacted well to the company’s share price.
Hence why Lightspeed stock deserves some love. Lightspeed has also seen total revenue rise 25% year over year. Its gross transaction volume (GTV) has also climbed significantly. Yet shares haven’t returned to the 52-week highs or all-time highs enjoyed over the last few years.
That’s why Lightspeed stock is certainly an undervalued tech stock at the moment. What’s more, there is more profit very likely on the way. The company used its share value when it was high to invest in major acquisitions. Ones that have brought the company to the next level when handling enterprise-level companies.
Now, the company is focusing on Lightspeed Payments. Right now 25% of its merchants use this platform, and the digital payment provider has the goal to reach 50% in 2024. When that happens, this could create a large increase that investors should see reflected in the share price. So even though shares jumped 35% in the last month, I’d say that’s only the beginning.
Why Kinaxis stock?
As for Kinaxis stock, if there was one major hurdle that tech stocks and retailers had to overcome the last few years, it’s supply-chain demand. Before the supply-chain disruptions, I remember not even really knowing what that meant. However, that changed quickly as supply-chain disruptions entered my everyday life.
Kinaxis stock underwent serious disruptions in this regard as it tried to get its clients back up to pace post-pandemic restrictions. It was a long road to follow, but Kinaxis stock managed to handle it well. In fact, management even went on to help other smaller institutions with their own supply-chain issues.
It’s clear to see then that Kinaxis stock is a leader among supply-chain tech stocks. That’s unlikely to change, and perhaps will merely adapt. Like Lightspeed stock, it handles large clients, those at enterprise levels. Further, it continues to adapt by adding artificial intelligence options as well to its arsenal. This includes Rapid Response, used for years by Kinaxis stock to “rapidly respond” to issues faced by clients shipping their products.
The company surged past earnings estimates during the last quarter, leading to a share jump of about 17%, as of writing. As the company continues to create partnerships and acquisitions, it’s clear its stock will only rise. To that end, the company announced a buyback program after its latest earnings report.
So sure, tech stocks are cheap, but not all are great investments. Yet in the case of these two, each is a great buy on the TSX today.