What’s up guys, it’s wiz.
Welcome back to the channel. If you are new, I am a Canadian investor. I cover a whole lot of information about investing in Canada and do research into our Canadian market. I dive into growth investing, dividend investing and Canadian small caps / penny stocks. Today, I will be going over what I believe are currently the two best Canadian tech stocks. This is an amazing tech duo, I’ll explain later on why I call it a duo, but in short it’s because one is the parent company of the other and their business locations are different. If you are looking to diversify your portfolio into some tech stocks or looking to replace Shopify then stay tuned and leave a thumbs up on the vid for me. For new investors, you need to join Wealthsimple Trade if you are looking to start investing and live in Canada. If you use my link in the description to join Wealthsimple, you get 2 free stocks worth up to 4500$ so do not miss out.
I believe Constellation Software (ticker symbol CSU) is Canada’s best tech company after what we witnessed with Shopify. The enterprise software giant is a serial acquirer — with over 300 acquisitions under its belt. This year, the company has deployed more cash in acquisitions than ever before. Once these new firms are integrated with the core business, free cash flow should expand substantially. Meanwhile, Constellation Software’s stock is 7% lower year to date. The stock isn’t cheap. It trades at a price-to-free cash flow ratio of 30. That’s higher than its long-term average of 21. It’s also higher than most of its enterprise software peers. However, if recent acquisitions can boost free cash flow in the year ahead it could justify the current valuation. For now, I’m holding onto my Constellation Software stake and looking for opportunities to accumulate more.
Topicus (ticker symbol TOI) is another stock worth accumulating during this market correction. The company replicates Constellation’s business model in Europe. Just like its former parent company, Topicus has doubled down on acquisitions this year. Since January 2022, the company has acquired 21 businesses. That’s a 20% expansion to its entire portfolio in just half a year. The largest acquisition is Poland-based Sygnity SA, which is being acquired for $54.6 million USD. Altogether, these acquisitions could add over $100 million to the company’s top line and boost earnings by double-digit percentages. However, the stock has dropped 30% year to date and is trading just 18% higher than its listing price from last year’s initial public offering. It’s arguably undervalued, which is why I’m boosting my stake in the company during this downturn.
Hope you guys enjoyed this short video about this amazing Canadian tech duo. Do you guys still prefer Shopify or over this duo? Let me know what you think. Make sure to always do your own due diligence before investing into any of the mentioned companies. If interested in more Canadian tools for your investing, check out the kofi link in the description to get access to my custom excel of my stock portfolio and my holdings. I also have a free Canadian investing blog for investors if you prefer reading over videos, head over to unwiz.com if interested. Please watch my previous videos on Canadian stock recommendations and let me know of any Canadian stocks you want me to look into and give my opinion on. Let me know in the comments, since I really want to expand my knowledge in the Canadian market, and you also expand your own knowledge by asking questions. It is a win-win situation. If you did enjoy this video, leaving a like really helps grow the channel! Thanks for watching, I’ll see you guys in the next video!