Technology stocks outperformed in 2024 and helped the Toronto Stock Exchange achieve an 18% yearly gain. Celestica (TSX:CLS), the sector’s top performer, benefitted from the artificial intelligence (AI) wave and backed up the stock’s meteoric rise with strong financial performance.
Fortunately, the high-flying AI stock isn’t the only option for Canadians investing in the high-growth sector. Tecsys (TSX:TCS) and Sangoma Technologies (TSX:STC) are cheaper and the uptrend could continue in the new year. Their trailing one-year price returns are 40.1%-plus and 150.6%-plus, respectively.
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Winning run
Many missed out on Celestica’s winning run, although the growth prospects remain tremendous due to the AI boom. As of this writing, the share price is $148.11, 296.8%-plus higher than a year ago. The $17.2 billion company provides supply chain solutions and electronics manufacturing services (EMS), including in hyperscaler markets.
Celestica is Canada’s counterpart to chipmaker NVIDIA across the border. In the nine months ending September 30, 2024, net earnings increased 82.7% year-over-year to US$293 million. Its President and CEO, Rob Mionis, said, “Looking to next year, we continue to see solid demand signals from many of our large customers, which are providing us with visibility for continued growth.”
The new strategic relationship with Groq, an AI company that developed the Language Processing Unit (LPU), is a growth catalyst. Celestica will support Groq in manufacturing AI and machine learning servers beginning this year.
Scaling the business
Montreal-based Tecsys provides advanced supply-chain solutions, focusing on the healthcare and auto parts industries. The revenue of this $641.8 million company has risen consistently every year in the last three fiscal years.
Its President and CEO, Peter Brereton, said, “Fiscal 2024 has been a landmark year for Tecsys in which we have demonstrated our ability to drive continued growth and expand market opportunity.”
In the first half of fiscal 2025 (six months ending October 31, 2024), Software-as-a-Service (SaaS) revenue and net profit rose 33% and 39% year-over-year respectively to $31.4 million and $1.55 million. According to its CFO, Mark Bentler, the results reflect steady progress across key metrics and Tecsys continues to scale the business.
“We head into fiscal 2025 with confidence that we are delivering exceptional value to our customers and are well-positioned to capitalize on our market momentum,” Brereton added. If you invest today, Tecsys trades at $43.50 per share and pays a 0.72% dividend.
Driving innovation
Due to its positive growth trajectory, Sangoma is now on investors’ radar. The $342 million communication technology company has a global communications platform for small and mid-market businesses. It delivers cloud-based Communications-as-a-Service (CaaS) solutions. As of January 9, 2024, this fast-rising tech stock trades at $10.20 per share.
In Q1 fiscal 2025 (three months ending September 30, 2024), net loss thinned 21.9% to US$1.9 million compared to Q1 fiscal 2024, while operating cash flow increased 55% year-over-year to US$12 million. Charles Salameh, CEO of Sangoma, notes the growing pipeline and deal sizes. He added that business profitability remains strong due to the robust growth in operating cash flow.
Pick any one stock
Celestica stands out in Canada’s tech sector, but the price is expensive now. Tecsys and Sangoma Technologies are the next-best alternatives for price-conscious investors.
