CSU:CC - Constellation Software: Buy Sell or Hold?
2024-04-22 16:00:00 ET
Constellation Software ( TSX:CSU ) is a very interesting stock. Among newer investors, it’s very likely that you’ll never have heard of this company. However, among experienced investors, there’s little doubt that you would’ve at least thought about buying shares at one point or another. If you want my take, I think every investor should have some shares in Constellation Software.
So, if this company is so great and well-known by experienced investors, why do those newer to the stock market not know it? Well, for starters, Constellation Software doesn’t operate a consumer-facing business. That means you likely won’t encounter this company in your everyday life. Its business focuses on the acquisition of vertical market software (VMS) businesses.
For most of its history, Constellation Software has focused on acquiring small- and medium-sized VMS businesses. That was a strategy that proved to be very successful. Following that business model, Constellation Software grew into one of the most successful stock market stories in the country.
However, in 2021, the company announced that it would finally start targeting large VMS businesses for acquisition. Constellation Software’s president, Mark Leonard, announced that the company would be building out a small team dedicated to focusing on large VMS acquisitions. This effort has culminated in a couple of spinoffs, helping the company facilitate those acquisitions.
Why should investors buy this stock?
As I mentioned previously, Constellation Software is one of the most successful stocks in the history of the Canadian market. As of this writing, Constellation Software stock has gained more than 20,000% since its initial public offering (IPO).
Let’s put that growth into perspective. If you had invested $10,000 around the time of Constellation Software’s IPO, then you would have been able to buy 546 shares. I won’t account for fractional shares since Canadian brokerages didn’t offer that back in 2006. Today, if you still held those 546 shares, your position in Constellation Software stock would be worth more than $2 million.
Despite those outstanding gains, Constellation Software hasn’t really shown signs of slowing down. So far this year, the stock has gained more than 13%. Looking back over the past year, we can see that Constellation Software stock has gained nearly 40%. Those are returns that greatly outpace the broader market. To put that into perspective, consider that the TSX has gained about 5% in 2024 and only 6% over the past year.
In addition to its outstanding performance, Constellation Software continues to be led by its founder, Mark Leonard. History has shown that founder-led companies tend to outpace competitors led by non-founders. In my opinion, as long as Mr. Leonard continues to lead this company, Constellation Software is an easy buy for any growth investor .
If you’re looking for a great tech stock to hold in your portfolio, then consider adding shares of Constellation Software today. In my opinion, it’s a stock that could be very rewarding to hold over the next decade.
The post Constellation Software: Buy, Sell, or Hold? appeared first on The Motley Fool Canada .
Fool contributor Jed Lloren has positions in Constellation Software. The Motley Fool recommends Constellation Software. The Motley Fool has a disclosure policy .
2024