Best Stock to Buy Right Now: Topicus or Lumine Group?

Which stock is the better buy right now?

If you’ve got some extra cash sitting around and you’re eyeing the tech sector for long-term growth, you might be looking at two of the more intriguing Canadian companies: Topicus.com (TSXV: TOI) and Lumine Group (TSXV: LMN). Both were spun out of Constellation Software, which is known for its stellar long-term returns and an acquisition strategy that’s the envy of the industry. Topicus and Lumine follow the same playbook: they buy niche software companies and build steady, recurring revenue. But which one is the better buy right now?

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Source: Getty Images

Topicus

Based in the Netherlands, Topicus focuses on vertical market software for sectors like healthcare, education, and finance. These are mission-critical platforms that businesses rely on every single day. That kind of consistency is a big plus, especially when the broader market gets rocky. In the first quarter (Q1) of 2025, Topicus reported revenue of €355.6 million, which was up 16% from the same time last year. Net income came in at €38.8 million, up from €28.3 million in Q1 2024. This kind of steady growth shows the model is working, and the tech stock continues to deliver.

For the quarter, free cash flow available to shareholders was an impressive €161.7 million, up 21% year over year. That’s important because cash flow is what allows a company like Topicus to keep acquiring new businesses without having to raise debt or dilute shareholders. Speaking of acquisitions, it deployed €39.4 million in new deals during the quarter. This kind of disciplined growth can be a recipe for compounding returns. Topicus is also profitable and efficient. It has a profit margin of 7.11%, a return on assets of 8.63%, and a return on equity of 26.6% as of writing.

Lumine

Lumine Group is newer to the market, having been spun out of Constellation in 2023. It focuses specifically on communications and media software, acquiring companies that provide backend technology for telecoms, broadcasters, and content distributors. The space is a bit narrower than Topicus’s, but it’s still rich with opportunity, especially with the rise of streaming and connected devices.

Lumine’s most recent results were a mixed bag. In Q1 2024, it reported revenue of $141.1 million, which was up a strong 48% from the year before. That’s impressive growth, and it shows that Lumine is finding success with its acquisitions. Operating income doubled to $44.5 million, so the core business is clearly profitable. But here’s the catch: it posted a net loss of $304.3 million for the quarter. The loss was largely due to expenses tied to redeemable preferred and special securities, non-cash items that complicate the picture a bit.

Despite that headline number, cash flow tells a more optimistic story. Cash flows from operations jumped 134% to $35 million, and free cash flow available to shareholders rose 146% to $28.8 million. That kind of underlying performance shows that Lumine is still delivering in areas that matter to long-term investors.

Bottom line

If you’re looking for stability, consistent profits, and a proven track record, Topicus is the stronger choice right now. It’s already demonstrated an ability to grow both organically and through acquisitions, and it’s doing it without taking on significant debt. The business model is well established, and the tech stock has carved out a solid niche in Europe with room to grow.

Lumine is a bit more speculative. It’s growing fast and has already shown it can generate strong operating profits. However, the structure of its financing and the complexity of its recent spinout add some near-term uncertainty. That said, for investors who believe in its strategy and are comfortable with a bit more risk, Lumine could deliver big rewards over time.

At the end of the day, both Topicus and Lumine are in the business of finding and scaling valuable tech stocks. That model has worked wonders for Constellation, and there’s every reason to believe it can continue to work here, too. But if you’re only picking one stock and want a smoother ride to long-term growth, Topicus has the edge. It’s already firing on all cylinders, and the cash it’s throwing off makes it easier to sleep at night while still aiming high.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Topicus.com. The Motley Fool recommends Constellation Software and Lumine Group. The Motley Fool has a disclosure policy.

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