For the bargain hunters out there who are looking for freshly-crashed names in a market that is mostly looking up, there are some names worth careful consideration. Indeed, there’s more to uncovering truly deep value than just screening out a bunch of stocks based on their low traditional valuation metrics.
Often, a stock has a good reason for correcting or even crashing by north of 40% from its peak. For deep-value investors, patience and a turnaround thesis are incredibly important because, as you may know, bottom-fishing can oftentimes be risky. A stock that’s collapsed by 44% or more might have another leg lower. And, yes, perhaps another 44% decline is possible if things behind the scenes are really bad and investors continue fleeing.
Sometimes, negative momentum just begets more selling. And that’s why extra due diligence is always wise when it comes to the fast-movers on the way down. Catching a falling knife can hurt. And investors should be prepared to deal with the potential consequences.
In any case, broken stocks of companies can be anything but broken. In this piece, we’ll look at a name that’s off by double-digit percentage points from the top, but seems to be a better deal than any sort of red flag or value trap.
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Constellation Software looks like a bargain
Enter shares of Constellation Software (TSX:CSU), which is down close to 44% from its June 2025 highs. Indeed, the company dealt with a plethora of issues before the SaaS-pocalypse (a vicious, sweeping sell-off that hit software stocks) dragged shares of CSU even lower.
After a nice 13% bounce in three months, though, it certainly feels like the name is a prime buy-the-dip opportunity. The dust has had a chance to settle, and while AI could threaten the livelihoods of a lot of companies within the software industry, I view Constellation as a name that probably isn’t going anywhere at the hands of something like Anthropic’s Claude Code or OpenAI’s Codex.
Just because how software is developed is changing does not mean Constellation can’t continue with the winning formula that helped its rise up the market cap ranks in the past decade and beyond.
Is there uncertainty with the name and the broad software scene as new AI technologies look to disrupt? Most definitely. I can’t remember a time when the software scene was this much of a giant question mark. And, for many, it’s unclear how things will pan out. Some software plays will adapt and win again, while others could just keep folding.
When does the selling end?
When it comes to Constellation, I think the fear-driven multiple re-rating is overdone. And while founder Mark Leonard is gone, I do think that there are opportunities to buy software firms on the cheap while everyone is still panicked over the future of SaaS. Looking under the hood of Constellation’s portfolio, a lot of the firms aren’t going to be closing up shop because AI is knocking at the door.
If anything, niche software might be able to use AI to save on costs. Any way you look at it, I do think Constellation skews cheap at around 17 times forward price-to-earnings (P/E). As the firm makes big swings, I’d look for CSU stock to be on the road to recovery.
