Just like that, two months of the new year are already over! While the TSX Index could face a rougher ride from here, I think that long-term investors should continue to stay on the path, even if it means having to ride out a few downturns between now and year’s end.
Indeed, it can be a more profitable endeavour to invest through market pullbacks while putting a bit more money to work than seeking to avoid them by selling at the first signs of increased volatility. It’s hard to sell at tops and buy close to bottoms. It’s a game that I believe Canadian investors should not strive to play. Instead, staying invested and paying attention to the next 15-20 years can make more sense than making moves to fare best in the next 15-20 weeks!
Undoubtedly, if you’ve got a long-term mindset and a strong stomach, the proven tech innovators may be worth betting on as the spring season looms. Undoubtedly, investors seeking to spring into Spring may do well with the following names as they look to add to their recent outperformance versus the TSX Index.
Though I’m no fan of chasing the stock market’s recent winners, I think the following names have enough fuel to march even higher from here as more investors appreciate the growth narrative and the valuation, which, I believe, is still somewhat reasonable, especially compared to some of the high-flying tech stars in the U.S. market right now.
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Constellation Software
Constellation Software (TSX:CSU) should be a household name by now, given its respectable 1,058% gains in the last 10 years. Of course, it’s a much larger firm today, with a market cap north of the $100 billion level. That said, I still think the software firm can continue to outpace the broader TSX Index or even the S&P 500. The company has been making very smart moves in the vertical market software scene.
As artificial intelligence (AI) plays a bigger role in the software world, I view CSU as a longer-term AI winner, as it seeks out the smaller firms that make the most of the revolutionary technology.
Indeed, if you’re an investor who’s grown tired of the same old mega-cap tech heroes being talked about non-stop, perhaps it’s a wise idea to consider diversifying your portfolio towards the lesser-known tech stars that benefit just as much if not more than the multi-trillion-dollar tech titans that continue to dominate the headlines.
For a company that knows the small-cap tech waters better than most, I’d be inclined to stick with CSU stock, even if it struggles to break out past the $5,000 level over the near term. At the end of the day, Constellation is a large-cap growth gem that knows how to get a lot of growth from its investment dollar.
Though acquisition spending has been cooler of late, I expect it to heat up as interest rates fall and the cost of AI computing looks to fall even further with time. Even if rates rise, Constellation knows potential when it sees it. For this reason, I’d not shy away from the name on any corrections between now and the year’s end. It’s one of those growth stars you can stash in your Tax-Free Savings Account (TFSA) for the long haul.
