NVEI:CC - Are These Canadian Tech Stocks Really Worth Adding to Your Portfolio?
2023-07-05 15:15:00 ET
After witnessing healthy buying at the beginning of this year, technology companies have been under pressure over the last few weeks. The concerns over economic growth amid rising interest rates and sticky inflation appear to have weighed on investors’ sentiments leading to a correction. However, the selloff offers excellent buying opportunities in the following three Canadian tech stocks.
Nuvei
Nuvei ( TSX:NVEI ) is a payment processing company that offers pay-in and pay-out solutions to businesses worldwide. Despite posting solid first-quarter earnings, the company has lost close to 30% of its stock price since reporting its earnings on May 10. The decline appears to be an overreaction to Paya’s acquisition-induced net loss of $8.3 million. Amid the selloff, the company’s valuation has declined to attractive levels, with its NTM (next 12-month) price-to-sales and NTM price-to-earnings multiples at 3.1 and 13.8, respectively.
Despite the near-term volatility, Nuvei’s long-term growth prospects look healthy amid the growing popularity of digital transactions. The company has increased its spending on new product development and business expansion. By the end of the first quarter, the company has expanded its APM (alternative payment methods) portfolio to 615. The acquisition of Paya has added three new channels, including B2B, government, and independent software vendors (ISV).
Further, Nuvei is strengthening its position in the U.S. iGaming space by expanding its customer base. Given its multiple growth drivers, favourable environment, and attractive valuation, I am bullish on Nuvei.
WELL Health Technologies
WELL Health Technologies ( TSX:WELL ) is another excellent tech stock you can buy now to earn superior returns in the long term. The adoption of telehealthcare services is growing amid the development of innovative products and increased internet penetration. The company is investing in developing artificial intelligence-powered tools to lower the administrative burden for the company while enhancing patients’ experience.
Further, the company is making strategic investments to expand its footprint across Canada, the United States, and Germany. So, its growth prospects look healthy. However, amid the weakness in the tech sector, the company has lost over 18% of its stock value compared to its 52-week high. Amid the correction, it trades at an attractive NTM price-to-earnings multiple of 15.8.
BlackBerry
My final pick is BlackBerry ( TSX:BB ), which posted impressive fourth-quarter earnings for fiscal 2024 last week. The company’s revenue grew by 122% to $373 million amid a $218 million contribution from its patent sales. Meanwhile, its revenue from the Internet of Things (IoT) and cybersecurity segments fell by 17.7% and 11.8%, respectively.
Several top players in the automotive sector are revisiting their development plans amid the software-defined vehicle trend. These actions have led to delays in the start of new programs, thus dragging BlackBerry’s IoT revenue down. However, this transition could drive the demand for QNX and IVY platforms in the coming quarters, thus benefiting the company. Meanwhile, its cybersecurity segment reported sequential growth amid a 14% increase in billings, which is encouraging.
Further, McKinsey projects the convergence of IoT and cybersecurity to create an addressable market of $750 billion by 2030. Given its expertise in these two sectors, BlackBerry is well equipped to acquire a substantial stake in this expanding market. Despite healthy growth prospects, the company trades at a discount of over 80% from its 2021 highs, making it an excellent buy for long-term investors.
The post Are These Canadian Tech Stocks Really Worth Adding to Your Portfolio? appeared first on The Motley Fool Canada .
Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nuvei. The Motley Fool has a disclosure policy .
2023