It was a year of redemption for the Canadian tech sector last year. After a disappointing performance in 2022, individual tech stocks across the TSX came roaring back in 2023. But even with a strong rebound last year, many of those high-flying growth stocks continue to trade below all times from 2021.
Investing in tech stocks right now
After such a strong performance over the past few months, it’s worth asking the question if now is the right time to be loading up on tech companies. There’s no shortage of stocks that are up double-digit numbers going back only to the end of October. Should tech investors wait for a pullback before loading up?
For investors with a short-term time horizon, I’d be hesitant about what the near-term future holds. We witnessed some huge gains over the past couple of months that don’t seem sustainable.
Long-term investors, on the other hand, don’t have nearly as much to be worried about. Having time on your side allows you to wait patiently through a potential pullback in the near future. What matters much more than a stock’s short-term price movements is your belief in its long-term growth potential, as well as your ability to hold through inevitable volatile periods.
With that in mind, I’ve reviewed a beaten-down tech company that has yet to start its turnaround. With short-term headwinds limiting the stock’s ability to rebound last year, there’s plenty of upside with this tech stock for growth investors who are willing to be patient.
Lightspeed Commerce
Now could be an incredibly opportunistic time to be loading up on shares of Lightspeed Commerce (TSX:LSPD).
The tech stock has traded at all kinds of highs and lows throughout its time as a public company. At one point in 2021, shares were up more than 700% from their initial public offering price. Today, the stock is barely positive from when it joined the TSX in 2019.
Like many other tech stocks, Lightspeed’s growth was pulled forward during the pandemic. The stock surged through most of 2020 and 2021 but came crashing down in 2022. In 2023, the business itself was making progress, but the stock price didn’t reflect the positive momentum. Shares continue to trade today at a whopping 80% below all-time highs.
While investing in a business down as much as Lightspeed can be nerve-racking, this is a business that’s loaded with long-term growth potential. Lightspeed has built a robust cloud-based offering that includes a large suite of commerce-related offerings. The company also already owns an international presence, which it continues to grow rapidly.
Foolish bottom line
As a Lightspeed shareholder myself, I won’t argue that the current price of Lightspeed isn’t at least partially warranted. A huge amount of growth was incurred in a short period for the stock, which it has since been paying the price for. That being said, investors need to keep in mind that the stock price of a company and the health of the business itself are never going to be directly corrected.
Yes, it may continue to be a volatile ride for Lightspeed shareholders. But at today’s bargain price, there’s a whole lot of multi-bagger growth potential here for long-term investors to take advantage of.
