Nvidia (NASDAQ:NVDA) stock has been on fire lately. In 2024 alone, this stock has gained about 86%. Looking back at the past year, we can see that Nvidia stock has soared 220%. While I think Nvidia stock could continue to rise due to the potential growth of the artificial intelligence industry, many investors would rather look elsewhere for growth. That’s because they think Nvidia stock has grown far too fast, leaving very little future growth on the table.
If you find yourself thinking that too, fear not. There are many great stocks that could be worth holding in your portfolio. In this article, I’ll discuss my top Canadian tech stock that investors should consider buying and holding for years.
Which stock should you buy today?
My top tech stock to buy today would be Constellation Software (TSX:CSU). This is one of the best stocks you’ve likely never heard of. Constellation Software acquires vertical market software (VMS) businesses. Upon acquisition, it provides those businesses with the resources necessary to turn them into exceptional business units. Since its founding, Constellation Software has managed to perfect its acquisition strategy. This success has been reflected in its stock price.
Since its initial public offering, Constellation Software stock has gained nearly 19,700%. That means a $10,000 investment would be worth more than $1 million today. There are very few stocks in Canada that can boast that kind of success.
What makes Constellation Software so attractive?
As mentioned previously, the secret to Constellation Software’s success is its acquisition strategy. Competitors realized that as well and have previously tried to copy Constellation Software’s approach to acquiring businesses. That’s why, due to competitive reasons, Constellation Software began limiting the details they release regarding each acquisition.
To put it simply though, Constellation Software has a strict criteria that they follow when considering businesses to acquire. Generally, they require that a business have an outstanding management team, consistent profitability, and above-average growth. For much of its history, Constellation Software has focused on small- and medium-sized VMS businesses.
However, in 2021, the company announced that they were having trouble finding great deals in small- and medium-sized VMS businesses. As a result, they decided to flesh out a new division that will specialize in large VMS business acquisition. That has cumulated in the spin-off of a couple of Constellation Software’s divisions in order to fund those new large VMS acquisitions.
Over the past year, this stock has gained nearly 44%, suggesting that the company’s new direction is paying off.
In addition to its excellent business performance, Constellation Software continues to be led by its founder, Mark Leonard. It’s previously been shown that founder-led companies tend to outperform peers led by non-founders. Because of that, as long as Leonard continues to lead Constellation Software, I believe this stock is one you could buy and hold without having to worry about it on a month-to-month basis.
