3 TSX Tech Stocks Soaring To Buy Amid Market Correction
Canadian equities turned slightly negative as the TSX Composite Index plunged 0.7% last week after rising steadily over the previous four weeks. Nonetheless, the stocks of some fundamentally strong tech companies, like Shopify (TSX: SHOP) (NYSE: SHOP), Lightspeed POS (TSX: LSPD) (NYSE: LSPD), and Constellation Software (TSX: CSU) made a strong rally in the third week of June. Let’s take a look at what could help these tech stocks soar, despite the recent general market weakness, and why they are worth buying right now.
Shopify stock posted 20% gains for the week
Shares of Shopify – the popular Canadian provider of e-commerce platforms – rose nearly 20% last week. With that, the headline is now up about 23% for the month.
In some of my recent posts, I’ve pointed out how much Shopify stocks have remained underrated in 2021 so far. Despite consistently posting much better-than-expected financial results with healthy future growth prospects, the stock underperformed the overall market in the first five months of the year.
On June 15, Shopify announced its agreement with Facebook and Google. Under the deal, Shop Pay – its merchant payment service – will be available on Facebook and Instagram later this summer and on Google later this year. This step is expected to accelerate the growth of Shop Pay and its contribution to the overall growth of Shopify’s business over the coming quarters.
Despite trading near record highs, Shopify stock is still worth buying as its rally for the year has just started, in my opinion.
Lightspeed stock jumped 13% last week
Lightspeed is another TSX tech stock that has underperformed the benchmark of the Canadian market this year. Its stock rose 149% last year, but registered only 11% gains since the start of the year in 2021. By comparison, the TSX Composite Index has risen about 15% this year.
While there was no specific news about the company last week, growing analyst optimism about its future prospects could be one of the reasons for its rally. Some notable analysts of Scotiabank, CIBC, and ATB Capital Markets raised their price targets for Lightspeed stock earlier this month.
According to Refinitiv’s estimates, Lightspeed sales are expected to double year-on-year (year-on-year) over the next three quarters. This massive sales growth could help the company meet its profitability goals sooner than expected in the years to come. At the current market price of $ 99.53 per share, I find its stock attractive to buy long term.
Constellation Software stock jumped 8%
Constellation Software stock rose 7.6% last week. As a result, shares of the Toronto-based enterprise software company have risen about 12% this year so far, still underperforming the benchmark TSX Composite. Like Shopify and Lightspeed, Constellation stock has also been largely overlooked by investors this year, I believe.
In the quarter ended March 2021, Constellation Software’s earnings increased 113% year-on-year to $ 15.50 per share. It was also 52% better than Bay Street’s estimate of US $ 10.21. the current sales trend is positive and its sales growth rate is expected to improve further in the second quarter. Robust sales and earnings growth, along with its management’s focus on consistently acquiring good companies, makes Constellation Software stock worth buying, despite the ongoing market correction.
This article represents the opinion of the author, who may disagree with the “official” recommending position of a Motley Fool premium service or advisor. We are straight! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer, so we post sometimes articles that may not conform to recommendations, rankings or other content. .
Suzanne Frey, an executive at Alphabet, is a member of the board of directors of The Motley Fool. Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of its CEO, Mark Zuckerberg, is a member of the board of directors of The Motley Fool. The Motley Fool owns shares and recommends Alphabet (A shares), Alphabet (C shares), Constellation Software, Facebook, Lightspeed POS Inc and Shopify. The Motley Fool recommends the following options: $ 1,140 long calls in January 2023 on Shopify and $ 1,160 short calls in January 2023 on Shopify. Foolish contributor Jitendra Parashar has no position in any of the stocks mentioned.