The S&P/TSX Information Technology Capped Index, which tracks the leading Canadian tech stocks, is trending higher. So far this year, the index has climbed over 20%. Moreover, it jumped by nearly 39% over the past year. Further, it delivered a whopping 134% return in the last five years.
While the Canadian IT index has gained substantially, growing demand for transformative technologies like artificial intelligence (AI) and digital transformation could continue to act as a catalyst for Canadian tech stocks.
With this background, let’s look at three no-brainer Canadian stocks from the tech sector to buy now with $1,000. These fundamentally strong stocks are poised to deliver above-average returns.
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Tech stock #1
Celestica (TSX: CLS) is a compelling investment for Canadians looking to capitalize on the booming AI sector. Shares of the design, manufacturing, and supply chain solutions provider have gained over 123% year-to-date and are up about 659% in three years. Despite this massive rally, the momentum in its business will likely sustain, driving its share price higher.
Celestica will likely benefit from growing investment in data centre infrastructure. Celestica’s Connectivity & Cloud Solutions (CCS) division is poised for substantial growth as demand for its hardware solutions increases. This division focuses on the communications and enterprise sectors, offering next-generation storage, server, and communications products crucial for scaling AI operations.
Celestica’s advancements in the networking area further bolster its prospects. The company is experiencing growing demand for its 400G and 800G switch products, catering to the evolving needs of high-performance computing environments. Moreover, Celestica’s Aerospace and Defence segment is gaining traction alongside a recovering industrial business. All these factors will likely drive Celestica’s financials and share price.
Tech stock #2
Within the technology sector, Canadians could consider buying Shopify (TSX: SHOP) stock to capitalize on the digital shift. Shopify offers an omnichannel commerce platform and is well-positioned to benefit from the growing shift toward multi-channel selling platforms.
Key factors supporting Shopify’s growth include its unified commerce solutions, focus on growing gross merchandise volume (GMV) and gross payments volume (GPV), innovative products, and expansion of merchant base, which will likely support its stock. It’s worth noting that Shopify Payments’ penetration was 61% in the second quarter (Q2) of 2024 while Shop Pay handled $16 billion in GMV, up 45% year-over-year.
Looking ahead, Shopify is expanding its payment solutions internationally, increasing its presence in the enterprise space, and tapping into offline and business-to-business (B2B) channels. These efforts will likely drive higher GMV and GPV, increase merchant adoption, and strengthen Shopify’s ecosystem.
Shopify is investing in AI to enhance its platform and services. Moreover, the company is transitioning to an asset-light business model, which will help deliver sustainable earnings in the long term and support its share price.
Tech stock #3
Docebo (TSX: DCBO) is another compelling stock in the tech space. This small-cap software company offers a cloud-based e-learning platform for enterprises and the government sector. Its AI-powered platform and ability to consistently expand its active user base position it well to deliver solid financials, which will drive its stock.
The company’s recurring subscription revenue is growing at a solid double-digit rate. Moreover, its average contract value is also expanding. Further, an increased number of Docebo’s customers are adopting its multi-year contracts. These factors are likely to add stability to its operations and support its growth.
Docebo is expanding into new industries and government sectors and focusing on new product launches. These moves are likely to broaden its addressable market and help defend and grow its market share.
Overall, Docebo’s growing customer base, higher average revenue per user, new product launches, acquisitions, and focus on improving operating leverage augur well for future growth.
