Forget Shopify: 1 Tech Stock to Buy Instead

Nuvei’s consistent focus on global expansion and growing demand for its payment services make it a very attractive Canadian tech stock to buy now and hold for the long term.

| More on:
Road signs rerouting traffic

Image source: Getty Images.

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.

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.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool has positions in and recommends Nuvei and Shopify. The Motley Fool has a disclosure policy. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.

More on Dividend Stocks

Dividend Stocks

Got $1,000? Here Are My 3 Top Stocks to Buy Right Now

These three TSX stocks would be an valuable addition to your portfolio due to their impressive underlying business, healthy growth…

Read more »

edit Close-up Of A Piggybank With Eyeglasses And Calculator On Desk
Dividend Stocks

How Much Money Do You Need To Retire Worry-Free? 

Are you unsure how much money you should save to retire worry-free? Here is a guide to help you plan…

Read more »

analyze data
Dividend Stocks

Is Fiera Capital Stock a Buy for Its 10% Dividend Yield?

Fiera Capital stock is down 44% from all-time highs increasing its dividend yield to 10.2%. Is the dividend stock a…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

TFSA Investors: Turn $7,000 Into $20,000 by 2030

Investors can consider holding undervalued growth stocks such as Pet Valu in their TFSA right now.

Read more »

Supermarket aisle with empty green shopping cart
Dividend Stocks

Is Now the Right Time to Buy Dollarama Stock?

Dollarama stock trades at a fair valuation despite its market-thumping gains in the past decade. Is the TSX stock still…

Read more »

protect, safe, trust
Dividend Stocks

How to Earn Safe Dividends With Just $10,000

Earn reliable income with relatively safe stocks like Fortis.

Read more »

edit Person using calculator next to charts and graphs
Dividend Stocks

2 Dividend Stocks to Beat Inflation

These two TSX dividend stocks can be excellent holdings to beat inflation, even as inflation cools down.

Read more »

dividends grow over time
Dividend Stocks

TFSA: Invest $20,000 and Get $860/Year of Predictable Passive Income

Looking for safe passive income that will grow and build wealth inside your TFSA. Check out this four-stock portfolio of…

Read more »