3 Reasons to Buy Lightspeed POS Stock Right Now!

Lightspeed stock remains a top bet for growth investors given its focus on acquisitions, rapidly improving bottom line, and expanding suite of solutions.

| More on:

Lightspeed POS (TSX:LSPD)(NYSE:LSPD) is one of the top growth stocks on the TSX. It went public in March 2019 and has since returned a stellar 473%. Comparatively, the S&P 500 Composite Index and the iShares S&P/TSX ETF have gained 62% and 36.5%, respectively in the last 15 months. Despite Lightspeed’s market-beating returns, the tech stock remains a solid bet for long-term investors. Here’s why:

Strong revenue growth

Lightspeed has managed to grow its revenue at a robust pace. Its sales have increased from US$57 million in fiscal 2018 to US$221.7 million in fiscal 2021, indicating annual growth of 57.26%. Bay Street analysts expect its sales to more than double in fiscal 2022 to US$452.66 million and rise by 35% to US$611.6 million in 2023.

This astronomical growth in the top line will help LSPD improve its profit margins as well. The fintech giant is still reporting a net loss. Its operating loss accounted for 37% of sales in 2018, and 27% of sales in 2019. However, due to acquisitions and increased spending amid the ongoing pandemic, its operating loss accounted for 51% of sales in 2021.

Analysts expect LSPD to narrow its loss per share from US$1.16 in fiscal 2021 to US$0.4 per share in 2023.

Focus on acquisitions

Lightspeed has managed to increase its revenue due to its focus on accretive acquisitions. The company has acquired 13 companies in the last two years, including the two buyouts it closed last month.

Lightspeed announced it intends to buy Ecwid for US$500 million. It will pay the latter US$175 million in cash and US$325 million in LSPD stock. The second acquisition was of NuOrder for US$425 million. These acquisitions allow Lightspeed to gain traction in other international markets as well as expand its customer base.

For example, Ecwid enables SMEs to add online stores to their existing websites. It has 130,000 paying customers in 100 countries. Similarly, NuOrder is a U.S.-based B2B e-commerce platform and has worked with 3,000 brands that include Canada Goose and Steve Madden, among others.

Lightspeed Payments and more

Another key driver of revenue growth is the company’s payments and financing solutions. Lightspeed Payments is a payment processing solution available to U.S. and Canadian retail customers as well as to hospitality customers south of the border. The rollout of this solution to LSPD’s European and Australian market represents a significant growth opportunity for the company.

Lightspeed explains, “Offering fully integrated payments functionality is highly complementary to the platforms we offer our customers today and allows us to monetize a greater portion of the GTV processed on our platforms annually.”

It added, “For SMBs, this service further reduces complexity by integrating seamlessly into our existing platforms, eliminating the need to deal with a separate payments provider and the related data reconciliation, and allowing for more accurate management of their businesses and easier access to additional Lightspeed products, such as Lightspeed Capital.”

Its Lightspeed Capital solution helps merchants with business growth and allows them to purchase inventory, invest in marketing or manage cash flows by providing financing up to US$100,000.

Record sales from Lightspeed Payments meant the company’s transaction-based revenue almost tripled to US$83 million in fiscal Q4 of 2021.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Lightspeed POS Inc. The Motley Fool recommends Canada Goose Holdings.

More on Tech Stocks

investment research
Tech Stocks

Is OpenText Stock a Buy, Sell, or Hold for 2025?

Is OpenText stock poised for a 2025 comeback? AI ambitions, a 3.8% yield, and cash flow power make it a…

Read more »

The virtual button with the letters AI in a circle hovering above a keyboard, about to be clicked by a cursor.
Tech Stocks

Emerging Canadian AI Companies With Big Potential

These tech stocks are paving the way to an AI-filled future, but still offer enough growth ahead for a strong…

Read more »

Young Boy with Jet Pack Dreams of Flying
Tech Stocks

Is Constellation Software Stock a Buy, Sell, or Hold for 2025?

CSU stock has long been a strong option for high growth, high value stocks. But are there now too many…

Read more »

An investor uses a tablet
Tech Stocks

Canadian Tech Stocks to Buy Now for Future Gains

Not all tech stocks are created equal. In fact, these three are valuable options every investor should consider.

Read more »

dividend growth for passive income
Tech Stocks

2 Rapidly Growing Canadian Tech Stocks With Lots More Potential

Celestica (TSX:CLS) and Constellation Software (TSX:CSU) are Canadian tech darlings worth watching in the new year.

Read more »

BCE stock
Tech Stocks

10% Yield: Is BCE Stock a Good Buy?

The yield is bigger than it's ever been in the company's history. That might not be a good thing.

Read more »

Happy shoppers look at a cellphone.
Tech Stocks

So You Own Shopify Stock: Is it Still a Good Investment?

Shopify (TSX:SHOP) stock has had a run, but there's still room to the upside.

Read more »

A person uses and AI chat bot
Tech Stocks

AI Where No One’s Looking: Seize Growth in These Canadian Stocks Before the Market Catches Up

Beyond flashy headlines about generative AI, these two Canadian AI stocks could deliver strong returns for investors who are willing…

Read more »