Forget TD Stock: 2 Tech Stocks to Buy Instead

As bank stocks continue disappointing investors in 2024, you can consider adding these two top Canadian tech stocks to your portfolio for superior returns.

Jitendra Parashar

Author Bio Jitendra Parashar is a financial journalist who has been writing for The Motley Fool Canada since June 2020. With more than 13 years of experience in financial journalism, equity research, and market analysis, he helps investors understand market developments and identify long-term investment opportunities. Before joining The Motley Fool Canada, Jitendra spent several years at Market Realist covering U.S. equities, major economic developments, and developments in the automotive and technology industries. He also worked in commodity and currency research at brokerage firms, gaining insight into how economic trends, central bank decisions, and geopolitical events influence financial markets. Jitendra writes for beginner investors, dividend seekers, and Canadians looking to build wealth over the long term. He also contributes to the daily TSX Today series, explaining key Canadian market developments and highlighting news investors should watch. Based in India, Jitendra follows Canadian and U.S. markets closely. Outside of work, he enjoys travelling in the Himalayas, street and nature photography, and exploring programming and artificial intelligence. Education MBA in Finance and International Business Bachelor's degree in Journalism Areas of Expertise Canadian and U.S. financial markets, long-term equity investing, dividend investing, macroeconomic and geopolitical trends, automotive stocks, emerging technologies, and artificial intelligence. Social Media Profiles LinkedIn Muck Rack Favorite Investment Quote “Simplicity is the master key to financial success.” — John C. Bogle

Published April 19, 2024 4:50 pm EDT

Shares of Toronto-Dominion Bank (TSX: TD) have been trading on a negative note for more than two years now. Even as the Canadian stock market reached an all-time high last week and currently trades with 3.6% year-to-date gains, TD stock has plunged by 8% this year so far — marking its third consecutive year of declines. While investors were hoping bank shares, including TD stock, would recover sharply in 2024 with hopes of multiple interest rate cuts during the year, persistent inflationary pressures are now dimming these hopes. This is one of the key reasons shares of TD Bank may remain volatile in the near term despite its strong long-term fundamentals.

That’s why I suggest you look at some high-growth tech stocks that are likely to continue benefiting from the strong demand for their products and services even amid the ongoing macroeconomic uncertainties. Here are two such amazing Canadian tech stocks that you can buy instead of TD Bank stock right now.

A worker uses a double monitor computer screen in an office. — Source: Getty Images

Constellation Software stock

Constellation Software (TSX: CSU) is the first stock in my list of high-growth Canadian tech stocks that are worth buying today. It’s a Toronto-headquartered tech firm that primarily focuses on providing specialized, mission-critical software solutions to private as well as public organizations across the world. It currently has a market cap of $78.4 billion as CSU stock trades at $3,700.18 per share after rallying by around 42% in the last year. By comparison, the TSX Composite has seen around 5% upside movement during the same period.

The strength in the software company’s financial growth trends despite the global economic slowdown is one of the main reasons why its shares have rallied in the last year. In 2023, Constellation’s sales surged 27% YoY (year over year) to US$8.4 billion, supported by the positive contribution from its recent acquisitions. Similarly, the company’s adjusted earnings rose 22.4% to $63.50 per share last year, beating Street analysts’ expectation of $62.01 per share.

Constellation’s long-term growth outlook looks impressive as it focuses on new acquisition opportunities to accelerate growth, which can help its share prices continue soaring.

Descartes Systems stock

Descartes Systems (TSX: DSG) could be another attractive Canadian tech stock to consider right now. This Waterloo-headquartered company offers a wide range of software solutions related to logistics and supply chain management. After ending 2023 with nearly 18% gains, DSG stock has already gone up by about 12% year to date to currently trade at $124.16 per share with a market cap of $10.6 billion.

In its fiscal year 2024 (ended in January), Descartes’s sales rose 17.9% YoY to US$572.9 million with the help of a strong 20% increase in its services revenue. To add optimism, annual profits from operations climbed up by nearly 9.5% from a year ago to US$142.8 million, in line with analysts’ estimates.

As the demand for quality software solutions to support logistics and supply chain businesses is likely to rise in the next few years, Descartes could benefit from this trend in the long run, which can potentially help its share prices inch up further.