Top 3 TSX Tech Stocks to Buy in October 2021

I believe these tech stocks are well positioned to benefit from the secular industry trends and could deliver solid returns for investors. 

| More on:

Tech stocks are known to deliver high growth. Moreover, the ongoing shift towards the digital economy and increased spending on omnichannel platforms indicate that TSX-listed tech stocks could continue to outperform the bench index by a considerable margin in the future.  

Let’s look into three such tech stocks that I believe are well positioned to benefit from the secular industry trends and could deliver solid returns for investors. 

Shopify 

Shopify (TSX:SHOP)(NYSE:SHOP) is my top pick in the Canadian tech space. The rapid shift in selling model towards omnichannel platforms and Shopify’s growth initiatives, including expansion of product base, positions it well to deliver strong revenues in the coming quarters. Furthermore, Shopify’s gross merchandise volume will likely remain elevated in the fourth quarter due to the holiday season, supporting its merchant solutions revenues.

I believe Shopify’s ability to attract new merchants on its platform and retain existing ones bodes well for future growth. Its platform expansion, the addition of high-growth sales and marketing channels, and continued strength in the payments solutions business indicate that the momentum in Shopify’s business will likely sustain. Moreover, international expansion and the addition of new merchant solutions support my bullish view. 

Though Shopify stock is expensive on the valuation front, its strong growth, operating leverage, and continued investments in business justify its premium valuation. 

Nuvei

Payment technology solutions provider Nuvei (TSX:NVEI) is another stock in the tech space that should be on your radar. The company’s strong go-to-market strategy, focus on high-growth verticals (regulated and social gaming and online marketplaces, among others), and acceptance of more payment types augur well for growth. 

Furthermore, product innovation, integrated solutions, and strategic acquisitions accelerate its growth rate and support the uptrend in its stock. Its total volume, revenue, and adjusted EBITDA are growing rapidly, and the company expects the trend to sustain. 

Overall, Nuvei is well positioned to capitalize on favourable industry trends. Its geographic expansion, focus on generating increased revenue from existing customers, and the addition of new merchants to its platform provides a solid growth base. 

Dye & Durham

Increased economic activities, improving operating environment, and reopening of courthouses provide a strong base for growth for the cloud-based software provider Dye & Durham (TSX:DND). Its strong transaction volumes and benefit from strategic acquisitions will likely drive its revenue and adjusted EBITDA and, in turn, its stock price. 

Its strong customer base (over 50,000 customers), long-term contracts with top clients, high retention rate, and revenue diversification indicate that Dye & Durham could deliver robust financials in the coming quarters. Further, its ability to acquire and integrate businesses and growing global scale augurs well for future growth. Furthermore, its transaction-based revenue model and strong balance sheet and cash flows support my bullish outlook. 

Notably, Dye & Durham stock has witnessed a correction in 2021, and it is down about 18% on a year-to-date basis. I believe the pullback in its stock provides a good opportunity for buying. Also, its forward EV/EBITDA and EV/sales multiples are trading well below the historical average, indicating upside in its stock. 

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 Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Shopify. The Motley Fool recommends Nuvei Corporation and recommends the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify.

More on Tech Stocks

think thought consider
Tech Stocks

Is CGI Stock a Buy Even With No Dividend Yield?

CGI stock may not have a dividend to speak of. But does that necessarily mean you should ignore this top…

Read more »

A robotic hand interacting with a visual AI touchscreen display.
Tech Stocks

Why Now Is the Time to Invest in Canadian AI Stocks

Are you looking for one of the most solid Canadian AI stocks out there? This one is probably your best…

Read more »

The letters AI glowing on a circuit board processor.
Tech Stocks

Why AI Stocks Should Be in Every Canadian Investor’s Portfolio

AI stocks continue to be one of the best options out there for long-term investing, especially when considering Canadian options.

Read more »

money goes up and down in balance
Tech Stocks

1 “Magnificent 7” Stock I’d Buy Over Nvidia Right Now

Here's why Meta Platforms stock is a better choice for Canadian investors compared to Nvidia in November 2024.

Read more »

A data center engineer works on a laptop at a server farm.
Tech Stocks

3 No-Brainer Data Centre Stocks to Buy With $500 Right Now

Data centres are going to be a huge growth opportunity in the next decade. And these are the top buys.

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

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

OpenText stock has fallen in the last few years, but that could mean this top tech stock remains an undervalued…

Read more »

AI microchip
Tech Stocks

Celestica Stock: Buy, Sell, or Hold?

Celestica's stock price has rallied 950% in the last five years. Will the AI boom send it even higher in…

Read more »

data analyze research
Tech Stocks

2 Ridiculously Cheap Growth Stocks to Buy Hand Over Fist in 2024

Well Health Technologies is a cheap growth stock to buy for its record-breaking results, massive revenue growth, and profitability.

Read more »