DND:CC - Where I'd Invest a $10000 Windfall Right Now
2023-06-16 16:00:00 ET
The equity markets have staged a comeback in the first half of 2023. But several stocks across multiple sectors are trading at a compelling valuation right now. Similarly, despite a spectacular rally among tech stocks, a few companies are down significantly from all-time highs, allowing you to buy the dip.
So, if you have $10,000 to invest right now, here are three quality tech stocks you can buy in June 2023.
Absolute Software stock
Valued at a market cap of $600 million, Absolute Software ( TSX:ABST ) stock is down 25% from record highs. However, the TSX tech stock has still tripled investor wealth in the last 10 years.
A company operating in the cybersecurity space, Absolute Software reported adjusted sales of $59.2 million in fiscal Q3 of 2023 (ended in March), an increase of 9% year over year.
It ended Q3 with annual recurring revenue of $229.5 million, up 13% compared to the year-ago period. The tech company generates 79% of its sales from the enterprise and government segment and the rest from education.
Absolute Software reported a net dollar retention rate of 105% in the quarter, which suggests existing customers increased spending by 5% in the last year.
Priced at less than three times forward sales, ABST stock is trading at a discount of 20% to consensus price target estimates. The company also pays shareholders an annual dividend of $0.24 per share, indicating a yield of 2%.
Snowflake stock
One of the most popular SaaS (software-as-a-service) companies in the world, Snowflake ( NYSE:SNOW ), is valued at a market cap of over US$60 billion. Snowflake offers an enterprise-facing data warehousing platform that integrates and analyzes data across cloud platforms.
Snowflake reported a net dollar-based retention rate of 151% in fiscal Q1 of 2024, which suggests customers are subscribing to additional products over time. The number of customers spending over US$1 million annually on Snowflake has increased to 373, up from 330 million in the previous quarter.
Dye & Durham stock
The final tech stock on my list is Dye & Durham ( TSX:DND ), one of the largest providers of cloud-based legal management software. Valued at a market cap of $975 million, Dye & Durham stock is down 67% from record highs.
Dye & Durham explained it has experienced a challenging period in the last 12 months due to falling real estate transactions, which have now begun to recover. However, given its strong earnings and robust cash flow profile, as well as its acquisition pipeline, its stock is undervalued.
DND stock is priced at two times forward sales, which is very reasonable. Further, it expects adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) in the June quarter to range between $65 million and $70 million.
Despite a difficult operating macro environment, DND continued to diversify its business in the last year. Its contracted annual recurring revenue currently accounts for 18% of total sales, more than doubling year over year, allowing it to reduce exposure to the real estate sector.
The company also reduced its cost base by $42 million or 19%, higher than its initial target of 10%. DND stock is priced at a discount of 40% compared to its consensus price target.
The post Where I’d Invest a $10,000 Windfall Right Now appeared first on The Motley Fool Canada .
Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Absolute Software. The Motley Fool recommends Snowflake. The Motley Fool has a disclosure policy .
2023