Docebo (TSX:DCBO) and Lightspeed POS (TSX:LSPD)(NYSE:LSPD) are two remarkable Canadian tech stocks that have been skyrocketing amid this pandemic. I’ve been pounding the table on both names for most of the year.
Although each name has enjoyed a substantial amount of multiple expansion in the months out of those March depths, I still think both mid-caps are still in the very early innings of their growth story. And while their valuations are likely stretched, I’ll be hungry to buy should another tech wreck be in the cards.
Docebo: An e-learning tech stock that keeps getting better
Docebo is a little-known up-and-comer that’s been quietly building a massive moat for itself within the niche Learning Management System (LMS) market. Amid the coronavirus-induced work-from-home (WFH) shift, Docebo’s products have been selling like hotcakes.
The company already had an impressive roster of clients going into this crisis. After a year full of huge client wins, including the likes of Amazon.com Web Services, Docebo could find itself becoming a household name, as WFH infrastructure is likely to become that much more vital the longer this pandemic drags on.
With coronavirus cases surging around the globe, the demand for WFH-enhancing platforms could surge further. And although DCBO stock now has a nosebleed-level valuation, I’d argue that relative to its cloud peers and its high growth ceiling, that the tech stock is still quite cheap at north of 23 times sales, as absurd as that sounds!
The company has a solid balance sheet, with north of $60 million in cash at the end of its fiscal third quarter. While most other firms are suffering from business erosion, Docebo will be a spot to take its growth into overdrive. And as it does, clients are likely to continue flowing in.
Docebo’s growth story is real. And if it dips meaningfully going into year-end, I’ll be ready to buy.
Lightspeed POS: Still highly misunderstood
Another under-the-radar Canadian growth sensation that’s been hot of late is misunderstood commerce-enabler Lightspeed POS. The company melted down 75% back in February and March to recover all of the ground lost in the subsequent months. After quadrupling back to pre-pandemic heights, the company, I believe, deserves the title of most misunderstood business on the TSX Index.
Back in April, I’d encouraged investors to back up the truck on the tech stock, noting that fears over the vulnerability of Lightspeed’s client base were greatly exaggerated. Indeed, that turned out to be the case, as a majority of Lightspeed’s merchants are not at risk of going belly up anytime soon.
As this crisis worsens enough to spark another round of government-mandated lockdowns, Lightspeed’s restaurant and retail clients will be under immense pressure once again. Some of Lightspeed’s merchants may not make it, but if I had to bet, I’d say that far more new firms will embrace Lightspeed’s value-adding offering than the existing ones that will become unable to meet the costs.
Lightspeed’s business is both negatively and positively impacted by this crisis. However, the net impact, I believe, is positive and think shares are headed much higher as the firm, like Docebo, puts its foot on the gas on the growth front thanks to its strong balance sheet.
