The Canadian stock market as a whole had a rebound year in 2023, with the S&P/TSX Composite Index returning just about 10%. But many individual stocks, particularly in the tech sector, surged far higher than just 10% last year. Those gains have continued right into 2024, making the tech space one of the hottest in the stock market right now.
With tech stocks as hot as they are right now, it’s understandable to question whether now’s the right time to be investing. For short-term investors, waiting for a pullback could be the right decision. But for investors with time on their side, there’s no sense in trying to time the market.
There are plenty of high-quality tech stocks to choose from on the TSX. Here are two top companies to add to your watch list today.
Tech stock #1: Shopify
At this rate, it won’t be long before Shopify (TSX:SHOP) is back to all-time highs. The tech stock has surged more than 80% over the past 12 months, which now have shares trading less than 50% below all-time highs.
It wasn’t long ago that Shopify was not only the largest tech company in Canada but the largest on the TSX. But after a massive pullback in 2022, Shopify has long since given up its top spot.
Despite the extreme volatility as of late, Shopify has certainly not been a disappointment to its long-term shareholders. While the broader Canadian stock market has returned roughly 30% over the past five years, excluding dividends, shares of Shopify are up more than 400%.
For anyone thinking about buying shares of Shopify today, I’d be prepared for more volatility, at least in the short term. That being said, I definitely would not want to bet against Shopify continuing to deliver market-beating returns over the next decade.
If you can handle the ups and downs, now’s a good time as any to be investing in Shopify.
Tech stock #2: Constellation Software
Nearing a price tag of $4,000 a share, Constellation Software (TSX:CSU) requires a steep initial investment. However, its market-beating track record more than justifies the commitment to this high-priced tech stock.
Even as the company is now valued at a massive $80 billion market cap, shares are up more than 200% over the past five years.
Investors looking to maximize returns as much as possible in the coming years may prefer a younger company like Shopify, as the commerce giant remains loaded with long-term growth potential. But for investors looking for dependable market-beating returns, Constellation Software is a perfect choice.
Foolish bottom line
There’s no question that the tech sector is one of the more volatile areas of the stock market. The upside, of course, is the potential to earn market-crushing returns.
As long as you’re willing to be patient, there’s nothing wrong with a bumpy ride. The important thing is that you’re investing in the right companies.
Shopify and Constellation Software are two tech stocks that are riding huge bull runs right now, but deservedly so. Do your future self a favour and put these two picks up on your watch list right now.
