1 Practically Perfect Canadian Stock Down 26% to Buy Now and Hold for Life!

This Canadian stock continues to be undervalued for investors wanting in on a solid, long-term tech stock.

Amy Legate-Wolfe

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Before joining Motley Fool Canada, she wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote: “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published May 2, 2025 11:45 am EDT

| More on: OTEX

When the market gets choppy, it can feel like there’s nowhere safe to park your money. But every now and then, a Canadian stock comes along that looks built to last, with solid fundamentals, strong growth potential, and a reliable dividend to top it all off. Right now, OpenText (TSX: OTEX) fits that description, and then some. It’s not just a good Canadian stock, it’s a practically perfect one to buy now and hold for life.

Abstract Human Skull representing AI — Source: Getty Images

About OpenText

OpenText is Canada’s largest software company, with a global reach and a deep bench of enterprise clients. The global software firm helps businesses manage information, everything from data protection to artificial intelligence. Its bread and butter has long been content management systems, but in recent years, it has aggressively expanded into cloud and cybersecurity. This evolution has helped it stay relevant in a fast-changing tech world.

Despite its strengths, the stock has been under pressure. As of writing, OpenText trades around $36.25 per share, down about 26% from its 52-week high of $49.31. That kind of drop might scare off short-term traders, but for long-term investors, it could be a gift. The decline came on the heels of earnings that missed expectations, but the bigger picture is far from bleak.

The breakdown

Let’s talk numbers. In its most recent quarterly report of Q3 fiscal 2025, OpenText posted revenue of US$1.3 billion. That was down 13.3% year-over-year, but the drop was largely due to the sale of its Application Modernization and Connectivity (AMC) business. Excluding that divestiture, revenue was down a more manageable 4.5%. More importantly, its cloud revenue grew by 1.8%, marking 17 straight quarters of organic growth. That kind of consistency in a tough environment speaks volumes.

The bottom line was also solid. Generally Accepted Accounting Principles (GAAP) net income came in at US$93 million, while non-GAAP net income hit US$216 million. This tells us OpenText is still highly profitable, even while it reshapes its business. Earnings per share (EPS) on a non-GAAP basis was US$0.79, showing the Canadian stock is still delivering value despite the market’s reaction. These numbers don’t scream collapse, but hint at transition and opportunity.

Dividends are another reason to love OpenText. The Canadian stock pays a quarterly dividend of US$0.2625 per share, which works out to a yield of about 4% at current prices. That’s pretty attractive for a tech stock. Management has been consistent with its dividend strategy, and there’s no sign of a cut. For investors looking to earn income while waiting for the stock to recover, it’s a great setup.

Looking ahead

OpenText also has some exciting developments on the horizon. It’s rolling out its new Titanium X platform, which integrates artificial intelligence (AI) and cloud capabilities across its product line. At the same time, the Canadian stock is finishing its Business Optimization Plan, a multiyear effort to boost efficiency and reduce costs. These strategic moves should start bearing fruit soon, especially as demand for enterprise software picks up again.

Another tailwind could come from increased spending on cybersecurity and data compliance. As regulations tighten and threats evolve, OpenText’s solutions are becoming more important to large businesses and governments. The Canadian stock’s existing customer base is sticky, and its products are mission-critical. That’s the kind of business you want to own long term.

Of course, no stock is without risk. OpenText’s debt levels are higher than some peers, largely due to acquisitions. And if the economy slows further, tech spending could remain soft. But this isn’t a speculative play; it’s a steady, cash-generating business with long-term contracts and global reach.

Bottom line

For Canadian investors looking for a dependable Canadian stock to tuck away, OpenText makes a strong case. It may not have the buzz of a startup or the flash of a new AI darling, but it does have what matters: a strong balance sheet, steady income, and a clear vision for the future.

So if you’ve got room in your portfolio and patience on your side, OpenText is worth a serious look. With the Canadian stock down from its highs and fundamentals still intact, this could be a classic case of buying low and holding for life.