With the technology scene booming, Canadian investors may contemplate swapping their loonies for greenbacks to pick up some high-flyers south of the border. Indeed, Canada’s tech scene is doing incredibly well right now. However, there’s just more to pick from in the U.S. market. In any case, with the exchange rate as it stands, I’d rather look to some of Canada’s top tech titans for a shot at next-level value and long-term momentum.
When it comes to Canadian tech plays that have been firing on all cylinders, it’s tough to look past Constellation Software (TSX:CSU), a Steady Eddie in the tech scene that may just be able to nudge its growth rate higher over the next three to five years as it explores opportunities in Canada’s smaller-cap tech scene (think startups).
With various small Canadian tech companies taking advantage of the rise of generative artificial intelligence (AI) as well as metaverse opportunities, I see plenty of growth pathways in Canada for Constellation to consider.
Indeed, Constellation Software has been incredibly efficient at making deals and investments across Canada’s tech scene. With a bit of AI (and perhaps some spatial computing) factored in, I expect the potential opportunities could look that much better for a firm that’s continued to outpace the broader TSX Index consistently over the long run. It’s not just that CSU stock has crushed the TSX of late; it’s been doing so for quite some time now.
Constellation Software stock: A long-time market beater that can keep it up
Over the last two years, shares of Constellation Software have increased more than 71%. But if you held shares over the past decade, you’d have a massive 1,283% gain. Multi-bagger gains from one of Canada’s most envied growth juggernauts. Though another 12 bagger gain in the next 10 years, I believe, is out of the question, I think Constellation could potentially double in the next seven years.
Undoubtedly, the longer you hold the stock, the better it gets. Though the firm is getting quite mature, with its $77.7 billion market cap, I do think the firm can keep its growth going strong as it looks to strategically place bets on a wide range of small Canadian firms that are seeking to harness the disruptive potential of AI technologies.
Indeed, I recently remarked on Constellation’s intent to go down more of a venture capital (VC) route. With value-conscious managers running the show, I think investors can have their cake and eat it, too. Of course, VC investing can entail greater risks, but with smart people who know the business better than most, the risk/reward tradeoff can be tilted in favour of investors.
Further, Constellation Software is well-diversified, with bets in a broad range of innovative companies, many of which could help CSU stock continue outpacing the rest of the markets over the foreseeable future.
The Foolish bottom line for CSU stock investors
Shares of CSU have already blasted off, and with a bit of technical weakness (shares have retreated around 3% over the past month) that could worsen, I’d look to find an entry point in the name should a nasty pullback hit at some point in this second quarter. Personally, I think there’s a good chance the recent dip could extend.
Though no CSU stock correction is guaranteed, I think CSU stock needs a bit of a break before its next march higher. The last month of consolidation may very well be the start of lower (or sidelines) action as we head into the warmer months.
