Artificial intelligence (AI) has been a major trend in 2024. Many believe AI could revolutionize the way humans do business in the future.
While U.S.-listed stocks have been the biggest beneficiaries from this soaring trend, Canada also has some great companies benefiting from AI. If you are looking for some stocks that could enjoy long-term AI tailwinds, here are three quality Canadian stocks.
PRL: An AI platform supporting loan growth
With a market cap of only $870 million, Propel Holdings (TSX:PRL) is a small-cap Canadian stock that should benefit from AI for years ahead. It has developed a proprietary lending platform that utilizes AI to analyze and underwrite loans to the subprime market.
With its platform, Propel can analyze thousands of lending variables. This gives it a significant edge over traditional loan underwriting methods. That prevents loan failure rates and helps deliver strong profitability.
Propel has been growing revenues by a 40%-plus annual rate in the past several years. While that might slow to an extent, it is still expecting high 20% earnings growth in 2024.
With strong demand for its loan products and ample room to expand its services, Propel still has a significant opportunity to use AI to unlock value for shareholders.
DSG: Logistics automation with a long runway
Another stock that utilizes AI to drastically improve customer outcomes is Descartes Systems (TSX:DSG). It provides the world’s most comprehensive logistics connectivity and communications network.
Over the years, it has built end-to-end solutions for routing, telematics, trade intelligence, and freight/shipping management.
For several years, Descartes has quietly been using AI applications to help streamline applications for its customers. Logistics and freight processes still have a long way to be automated by technology and artificial intelligence. As a result, Descartes still has a long runway of growth ahead.
Unlike many AI meme stocks, Descartes is extremely profitable. It earns high profit margins and generates significant amounts of cash every quarter.
Descartes has a cash-rich balance sheet. It has successfully been deploying its cash into market-expanding acquisitions. For a mix of acquisition and organic growth, this is one of the best Canadian tech stocks you can buy.
CSU: AI application testing ground
Constellation Software (TSX:CSU) is not synonymous with flashy new technology offerings. It is best known for its niche software acquisition strategy around the world.
It tends to buy boring, specialized software businesses, milk them for their steady cash flows, and then reinvest the cash into more acquisitions. Investing in expensive organic initiatives (like developing AI applications) is not really Constellation’s strength.
However, in a recent AGM (annual general meeting), Constellation management noted that AI has become a larger part of its business. It has even acquired a few significant businesses that generate most of their income from artificial intelligence applications.
Likewise, several group heads discussed how they were having their teams regularly experiment with AI. It believes AI will become a larger part of its business over time.
If you want a growth stock with AI exposure in a diverse array of sectors, it is hard to beat Constellation. It may not have AI in its name, but it is hard to argue with its massive 1,375% return over the past decade.
