The Canadian tech sector continues to offer exciting opportunities for investors looking for growth. As March comes to an end, three tech stocks have caught my attention. Those are Shopify (TSX:SHOP), Constellation Software (TSX:CSU) and Kinaxis (TSX:KXS). Each operates in a different area of the tech industry, but all have strong potential and solid financials that make them worth considering.
Shopify
Shopify is a giant in the e-commerce world. It allows businesses to set up online stores and provides a range of services, from payment processing to marketing tools. The company’s latest earnings report for the quarter ending December 31, 2024 showed strong growth, with revenue rising 31% to $2.8 billion. Adjusted earnings per share (EPS) climbed 29% to $0.44. Therefore Shopify has been steadily expanding its merchant base and adding new services, which has helped fuel its continued success.
One major development for Shopify is its decision to switch its U.S. stock listing from the New York Stock Exchange to Nasdaq. This move, set to take effect on March 31, 2025, could lead to Shopify being added to the Nasdaq 100 Index later this year. If that happens, it could attract more institutional investors and give the stock an extra boost. So investors, watch this one tech stock.
Constellation Software
Constellation Software has built a strong business by acquiring and managing smaller software companies. Its strategy has been highly successful, and the tech stock continues to grow through smart acquisitions. In its latest earnings report, Constellation reported a 20% increase in revenue, reaching $10.1 billion for the year ending December 31, 2024. Net income attributable to common shareholders rose 29% to $731 million, or $34.48 per diluted share.
One of Constellation’s key strengths is its diversified portfolio. It owns software companies in various industries. This helps protect it from downturns in any one sector. Its track record of acquiring companies and making them more profitable has made it a favourite among long-term investors. While the tech stock is expensive, Constellation’s ability to keep growing makes it a solid option for those looking for stability and consistent returns.
Kinaxis
Then we have Kinaxis, which specializes in supply chain management software. It helps businesses optimize their operations using real-time data and analytics. The company has been growing steadily, driven by double-digit revenue growth and strong Software as a Service (SaaS) revenue. It has also maintained healthy cash flow and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), thus making it an attractive option in the tech space.
Kinaxis has benefited from the increased demand for supply chain solutions, especially as businesses look for more efficient ways to manage their logistics. It has a strong customer base and continues to add new clients, further strengthening its position in the market. As companies continue to invest in technology to improve their operations, Kinaxis is well positioned to keep growing.
Bottom line
These three tech stocks offer different opportunities within the tech sector. Shopify dominates e-commerce, Constellation excels in software acquisitions, and Kinaxis is a leader in supply chain technology. All three have strong financials and have shown resilience in a changing market.
For investors, the key is to consider long-term potential. Shopify’s move to Nasdaq could bring new momentum, Constellation’s acquisition strategy remains strong, and Kinaxis continues to benefit from increased demand for supply chain solutions. Each of these tech stocks has risks, but for those willing to take a long-term view, these could offer solid returns.
As always, it’s important to do thorough research before making any investment. The tech sector can be volatile, but companies with strong fundamentals and growth potential often prove to be great investments over time.
