The S&P/TSX Composite Index, a broader measure of the Canadian stock market’s performance, is flirting with record highs in May. The energy and materials sectors have shown resilience year to date, and technology stocks aren’t left behind. Artificial intelligence (AI) has found a way to prop up some Canadian technology stocks, and the best-performing TSX tech stocks so far in 2024 include Celestica (TSX:CLS), Propel Holdings (TSX:PRL), and a little-known analytics software vendor Copperleaf Technologies (TSX:CPLF) stock.
Let’s see if they can keep rising.
Propel Holdings: An AI-propelled fintech stock
Leading the pack is Propel Holdings, a fintech stock leveraging proprietary AI to win new business at astronomical rates to propel itself into higher profitability. Propel Holdings is one of the best-performing TSX tech stocks this year with a 94% gain since January.
The company is a rising credit provider to an underserved high-yield consumer credit market in the United States and Canada. Its consumer brands MoneyKey and Fora, are gaining traction. Revenue grew 47% year over year during the first quarter of 2024. Net income followed suit, jumping 77% year over year.
Confident of the company’s business outlook, management raised Propel Holdings stock’s quarterly dividend by 8% in May, marking the fourth increase since the beginning of 2023.
Can shares keep rising? Propel Holdings stock has the potential to maintain its upward momentum into the second half of 2024. The company’s AI-powered credit software is growing the loan portfolio without compromising credit quality — a highly encouraging sign. Additionally, a forward price-to-earnings (P/E) multiple of 8.3 appears attractive compared to an industry average P/E of 23.7, suggesting room for further price appreciation.
Celestica stock: A Canadian tech veteran with startup-like growth
Celestica is a 100-year-old technology business that’s growing like a startup lately. CLS stock has skyrocketed by 81% so far this year, earning a place among the best-performing TSX tech stocks of 2024 (thus far). Shares remain nearly as cheap as they were a year ago despite a 366% in capital gains during the past 12 months.
The global supply chain solutions and electronics manufacturing services partner was once a manufacturing unit within IBM for 75 years until 1996.
Strong demand for agile systems in an AI era has coupled with a strong recovery in the technology hardware market in recent years, both to Celestica’s advantage. The company has been on a strong revenue and earnings growth spree lately, and it continues to post double-digit revenue-growth rates in 2024.
Total revenue surged by 20% during the first quarter of 2024 to US$2.2 billion, and gross margins expanded with volume growth. Management recently increased its revenue guidance for this year from US$8.5 billion to US$9.1 billion, seeing strength in the company’s revenue lines. Customer orders for faster server and storage components remain robust as businesses invest in AI computing capabilities globally.
Can shares keep rising? Celestica stock remains an undervalued growth stock with a forward P/E of 14.2 and a P/E-to-growth ratio of 0.6, which implies the market hasn’t fully appreciated the company’s potential earnings growth potential yet. Shares may sustain upward momentum if the company repeatedly surpasses its long-term revenue and earnings growth targets of 10% per annum and if the cash flow-positive company persistently repurchases its shares.
Copperleaf Technologies stock
Copperleaf Technologies, a Canada-based provider of AI-powered analytics and decision-making technology, has seen its stock rise 44% year to date. However, despite the best performance, CPLF stock remains 65% below all-time highs printed shortly after its initial public offering in 2021.
The $660 million small-cap company’s decision analytics platform helps customers make complex investment decisions regarding capital projects while factoring in qualitative aspects like environmental, social, and governance factors that impact risk profiles and valuations in large corporate projects.
Copperleaf targets a vast $12 billion market opportunity, promising clients enhanced returns on investment and improved capital efficiency while claiming historical reductions in planning time of up to 50%.
While profitability remains elusive, the company is regaining its revenue growth momentum. First-quarter 2024 revenue soared by 29% year over year, and its sales backlog increased by 32% to a record $145.5 million (equivalent to more than five quarters of revenue).
Shares may sustain recovery momentum if current sales growth momentum persists. However, the lack of profitability necessitates some investment caution even though a price-to-sales multiple of eight compares well against an industry average of nine.
