The U.S. tech scene has been hogging most of the attention in recent quarters, thanks in the mega-cap behemoths that have really doubled down on the rise of generative artificial intelligence (AI). Undoubtedly, many Canadians likely look south of the border when it comes to tech plays. Though I’m an advocate for checking out the U.S. markets for the best-in-breed tech plays (think the Magnificent Seven stocks), I also believe Canadian tech darlings are worth a look.
Sure, there aren’t as many Canadian tech stocks, but they are definitely worth a look if you’re looking to get just a bit more bang for your investment dollar. As generative AI continues to take off, helping firms drive profits to the next level, I believe Canadian tech plays will not be left behind.
In fact, many may be flying under the radar of Canadian and U.S. investors alike. So, without further ado, let’s check in with one of the best TSX tech stocks that would be smart to watch through 2024 as AI continues advancing.
Constellation Software
I’ve praised shares of software firm Constellation Software (TSX:CSU) for quite some time now, and not just for its respectable recent bout of outperformance. The stock has crushed the broader TSX Index in recent years, with more than 265% gains over the timespan. And though the valuation seems hefty at over 108 times trailing price to earnings (P/E), I actually believe you’re getting decent growth for the seemingly high multiple.
On a forward P/E basis, shares look far more palatable at around 35.1 times. That’s not that expensive for a company that’s found a way to create value from deals within the often overlooked small- and mid-cap software scene, one that many investors may be inclined to overlook.
As a diversified venture capital-like play in Canada’s intriguing tech scene, CSU stock stands out as a great buy as it retreats further. Shares are down nearly 5% from recent highs and could be headed much lower over the near term, opening up a great entry point for long-term growth investors.
Canada’s tech gem is still relatively under the radar
The $77 billion software firm is so exceptionally managed that I think it deserves the attention of U.S. growth investors who want to capitalize on the smaller corners of the tech universe. Whether or not the next big AI innovation comes from a relatively unknown startup remains to be seen.
Regardless, it’s comforting that Constellation has its sights set on the small players, as most other investors concentrate their attention on the massive tech titans in the United States.
There’s nothing wrong with loving the mega-cap tech plays. But ignoring the smaller-cap tech plays, I believe, could be leaving gains on the table. Either way, Constellation stock is a one-stop shop for Canadian growth investors looking to build wealth through the decades.
Shooting for the stars with CSU stock?
The firm has come such a long way, but I think there are still some incredible days ahead as it looks to target a $100 billion market cap. For now, shares look expensive at over $3,600 per share. But if you have enough for one share, perhaps on a pullback towards the $3,300 range, the name may be worth a closer look.
