Shopify (TSX: SHOP) has been one of the hottest Canadian tech stocks since it started trading on the Toronto Stock Exchange in May 2015. Despite crashing by 73% in 2022 due partly to growing macroeconomic challenges and surging inflation, SHOP stock has yielded nearly 300% positive returns in the last five years.
However, Shopify’s valuation has also become very expensive, trading well over 800 times its trailing 12-month adjusted earnings. That lofty valuation could limit its upside potential and make it vulnerable to a market downturn. These factors make Shopify a risky bet for investors with a low-risk appetite.
Nonetheless, the Canadian stock market is still home to many other high-growth tech companies that could deliver superior returns in the long run. Here is one of such tech stocks that you might want to consider buying instead of Shopify right now.
Nuvei stock
While Nuvei (TSX:NVEI) is not an e-commerce platform provider like Shopify, its business is still linked to the growth of online shopping. If you don’t know about it already, Nuvei mainly focuses on providing payment technology solutions to merchants across the world, which allows them to accept payments from various channels and platforms. While North America is its largest single market based on sales, the company also generates a notable portion of its revenue from other geographical segments, including Europe and the Middle East.
After tanking by 65% in the previous two quarters, NVEI stock staged a spectacular recovery in the fourth quarter of 2023, helping the company end the year in the green territory. In 2024, the stock has slipped by nearly 8%, currently trading at $32.07 per share with a market cap of $4.3 billion.
A closer look at its financial growth trends
Earlier this week, on March 5, Nuvei released its earnings report for its fourth quarter of 2023. During the quarter, its total revenue jumped nearly 46% YoY (year over year) to US$321.5 million with the help of a solid 53% increase in its total volume and revenue growth across all geographical segments.
In addition, the payment technology firm’s adjusted quarterly EBITDA (earnings before interest, taxes, depreciation, and amortization) surged around 40% from a year ago to US$120.1 million. Although its adjusted earnings figure of US$0.47 per share remained flat on a year-over-year basis, it exceeded Street analysts’ expectations of US$0.45 per share.
With this, Nuvei’s full-year 2023 sales went up 40.7% YoY to US$1.2 billion, helping it register a strong 24.5% increase in its adjusted EBITDA for the year.
What makes NVEI stock so attractive to buy right now
Despite its better-than-expected earnings growth trends, NVEI stock has seen nearly 30% value erosion in the last year, making it look really cheap to buy now and hold the long term. Also, the Canadian tech firm recently declared a cash dividend of US$0.10 per share for Q4 2023, reflecting its commitment to returning value to shareholders and making NVEI stock look even more attractive for income investors.
While ongoing macroeconomic challenges might affect its financial growth in the short term, Nuvei’s long-term growth outlook looks bright with consistently growing demand for reliable payment services and its consistent focus on global expansion.
