Why CGI Stock Could Be the Best Stock to Buy Right Now

CGI has a strong long-term history of shareholder value generation, operational performance, and stock price gains.

Karen Thomas, MSc, CFA

Karen is a stock market enthusiast focused on uncovering those stocks that she believes the market has mispriced. She does this through fundamental and quantitative analysis of companies and their industries, as well as a study of future opportunities and trends. She holds a Masters degree in Finance, the CFA designation, and has over 20 years of experience in the investment management industry. Having worked at a major pension fund, as well as two leading mutual fund firms as an analyst and portfolio manager, she has solid investing expertise which she aims to share with her readers.

Published February 20, 2025 9:15 pm EST

| More on: GIB.A

For some reason, we don’t often hear talk about CGI Inc. (TSX:GIB.A). Maybe it’s because this company has been steady and unwavering in a sort of quiet and understated way. Or maybe it’s because CGI’s stock price has moved higher, but in a slower less volatile way than some of its tech stock counterparts.

Whatever the reason, I’m here to draw your attention to this impressive tech stock, CGI. Here’s why it just might be the best stock to buy right now.

Data center woman holding laptop — Source: Getty Images

CGI stock: Strong long-term performance

To kick things off, I’d like to review CGI’s stock price performance. As you can see from the graph below, CGI stock has rallied 2,030% in the last 20 years. That’s higher than Microsoft Corp. (NASDAQ:MSFT) stock’s return of 1,550%!

From its beginnings in a basement in 1976 to today, CGI has focused on strengthening its expertise in the information technology (IT) services industry. Today, after many years of growing organically and via acquisitions, CGI is a $38 billion IT services company. It has a global presence, and it services a variety of industries and countries. Along the way, it has honed its expertise and focused on returns, efficiencies, and quality service.

A top-notch tech stock

Over the years, CGI has increased its scale and presence around the world. Simply put, it has been the consolidator. And it has done this profitably. In fact, in 2024, the company’s earnings before interest and taxes (EBIT) margin came in at 16.5% and its return on invested capital came in at 16%. This is a far cry from when the company was posting EBIT margins of well below 10% back in the early 2010s.

Looking ahead, the market remains fragmented, which means that there are plenty more acquisition opportunities for CGI.

CGI: Recent results

CGI’s fiscal 2024 results demonstrate the strength of the business. Revenue of $14.7 billion was accompanied by net earnings of $1.7 billion and earnings per share (EPS) of $7.31. This was 6.6% higher than last year. Finally, the company reported operating cash flow of $2.2 billion, which was 4.4% higher than last year and 15% of revenue. CGI is truly a strong cash generator.

As a result of this strong performance, CGI finally initiated a dividend. But the company has no intention of sacrificing its growth goals, and it still intends on consolidating the industry with additional acquisitions. The fact that CGI can do both is testament to the strength, stability, and security of the business.

As a sign of what’s to come, let’s take a look at the company’s backlog. Today, it stands at $28.7 billion, which is 10% higher than last year. And it represents a book-to-bill ratio of 109.3%. This means that more orders were received than filled. A ratio of over 100 means growth and a ratio of below 100 means that revenue is declining.

The bottom line

CGI stock has been a stellar performing tech stock for many years. However, it seems like many investors are not fully aware of the strength and impressive performance of the company. In this article, I hope I have brought some attention to this under-rated stock. It may just be the best stock to buy right now.