The Canadian equity markets have witnessed healthy buying over the last few days, with the S&P/TSX Composite Index rising 0.6% this month and 11% for this year. However, the following three tech stocks have not participated in this rally and have lost substantial stock value compared to their 52-week highs. Given their discounted stock prices and healthy growth prospects, these three tech stocks could deliver superior returns in the long run.
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Lightspeed Commerce
Lightspeed Commerce (TSX: LSPD) offers commerce solutions to businesses worldwide. Despite its healthy quarterly performances, the company has been under pressure this year, with its stock price falling around 38% compared to its 52-week high. Investors fear a global slowdown could lower IT (information technology) spending, thus reducing the demand for Lightspeed’s products and services.
However, Lightspeed continues to win new customers and expand its average revenue per customer. Besides, new product launches and the expansion of the adoption of its payments platform amid the introduction of its POS (point of sales) and payments platform could support its growth in the coming quarters. It has also adopted several cost-cutting initiatives, which could continue to improve its profitability.
Amid the recent corrections, Lightspeed’s valuation has declined to attractive levels, with its NTM (next 12 months) price-to-sales and price-to-book multiples declining to 1.7 and 0.8, respectively. Despite the near-term volatility, its healthy growth prospects and discounted stock price offer excellent buying opportunities for long-term investors.
BlackBerry
BlackBerry (TSX: BB) operates in high-growth sectors like IoT (Internet of Things) and cybersecurity. However, due to lower-than-expected growth in the IoT segment, the company has been under pressure over the last 12 months, losing around 58.5% of its stock price from its 52-week high. The company’s valuation looks attractive amid this pullback, with its NTM price-to-sales multiple at 2.3.
Moreover, the company outperformed its guidance in the May-end quarter. It is increasing its penetration in the automotive sector amid the growing usage of ADAS (advanced driving assistance systems) and digital cockpits. The company is also strengthening its presence in the general embedded market through its QNX platform, which offers huge growth potential.
Further, introducing artificial intelligence-powered products and services has improved customer satisfaction in the cybersecurity sector, thus leading to higher renewals. Considering all these factors, I believe BlackBerry could deliver multi-fold returns in the long run.
Dye & Durham
Dye & Durham (TSX: DND), which offers cloud-based efficient workflow software solutions to legal and business professionals, would be my third pick. Last month, the company announced preliminary results for its fourth quarter 2024, which ended on June 30. These preliminary results indicated revenue growth of 15%, with organic growth of 8%. Besides, the company could generate leveraged free cash flow of $28 million during the quarter.
The company has credited its shift toward the SaaS (software as a service) model for solid fourth-quarter performance, with the transition allowing it to effectively capture market opportunities. The healthy fourth-quarter performance and improvement in broader equity markets have increased its stock price by 4% since its preliminary results announcement. Despite the increase, it still trades at an over 33% discount compared to its 52-week high.
Besides, Dye & Durham recently announced that it would begin offering mortgage discharges for National Bank through its software solutions. This partnership would support the company’s aim to create a national settlement business to facilitate smooth real estate transactions across Canada. Given its growth initiatives, improving organic growth, and discounted stock price, I believe Dye & Durham would be an excellent long-term buy.
