The technology sector of stocks has quickly become one of the most popular industries to invest in for Canadians.
High-growth tech companies can provide higher returns than stocks from value sectors. Over a period of years and even decades, tech stocks have easily beaten the return of the markets.
As a Canadian investor, you probably already know that most of the biggest tech stocks trade in the United States on the NASDAQ exchange.
That’s not to say Canada does not have any tech companies, but a vast majority of the best tech stocks trade in the United States.
This article will cover the 10 best Canadian tech stocks to watch in October 2024.
What Are Technology Stocks?
Technology stocks are publicly traded companies that operate in one of the many technology sectors. These include information technology, social media, cloud computing, SaaS businesses, and semiconductors producers.
Tech stocks have gained popularity over the years because they can bring higher-than-normal returns after periods of rapid growth.
In Canada, the best TSX technology stocks are involved in sectors like software, eCommerce, digital payments, and enterprise solutions.
Here are the top 10 Canadian tech stocks to watch in October 2024.
- Constellation Software, Inc (TSE: CSU)
- Shopify, Inc (TSE: SHOP)
- Lightspeed Commerce, Inc (TSE: LSPD)
- Kinaxis, Inc (TSE: KXS)
- Nuvei Corp (TSE: NVEI)
- Docebo, Inc (TSE: DCBO)
- Descartes Systems Group, Inc (TSE: DSG)
- Absolute Software Corp (TSE: ABST)
- Magnet Forensics (TSE: MAGT)
- Topicus.com Inc (CVE: TOI)
Best Tech Stocks to Buy in Canada
1. Constellation Software, Inc (TSE:CSU)
Here are some key facts for CSU:
- Market Cap: $49.0 billion
- Sector: Software
- PE Ratio: 73.77
- 52-week Trading Range: $1783.98 – $2,460.00
- Dividend Yield: 0.24%
CSU is a diversified software company that was founded in 1995 and trades on the Toronto Stock Exchange. The stock is a component of the S&P/TSX 60 index.
Unlike other software companies, Constellation actively acquires smaller companies to hold in its umbrella of products and services. The company was founded by former venture capitalist Mark Leonard.
Since 1995, Constellation has acquired more than 500 tech companies and has several operating segments under its umbrella.
2. Shopify, Inc (TSE:SHOP)
Here are some key facts for SHOP:
- Market Cap: $75.3 billion
- Sector: eCommerce platform
- PE Ratio: N/A
- 52-week Trading Range: $33.00 – $94.73
- Dividend Yield: N/A
Shopify is an eCommerce software platform that was established in 2006 and is based in Ottawa, Ontario. The stock is dual-listed on the TSX and the NYSE and is a component of the S&P/TSX 60 index.
The company is one of the largest eCommerce and website software systems in the world. It is used in over 175 different countries and recently added France and Singapore.
It also offers several other products like Shopify Pay, Shopify POS, and even the integration of NFTs for artists who want to sell on Shopify.
Shopify is used by a long list of global brands, including Heinz, Mattel, Netflix, FTD, Kylie Cosmetics, Red Bull, Allbirds, and Supreme.
3. Lightspeed Commerce, Inc (TSE:LSPD)
Here are some key facts for LSPD.TO as of March 2023:
- Market Cap: $2.99 billion
- Sector: eCommerce/Point of Sale
- PE Ratio: 204.08
- 52-week Trading Range: $12.71 – $34.14
- Dividend Yield: N/A
Lightspeed is a Canadian eCommerce and Point of Sale technology company based out of Montreal, Quebec. The stock is dual-listed on the TSX and NYSE.
The company sells both software and hardware products for its business. Most of its revenues are recurring subscriptions and transaction fees paid by users.
Some well-known customers of Lightspeed include Theory, Tom Ford, Coach, Nordstrom, and Panos. A majority of its customers are from the retail and hospitality industries.
4. Kinaxis, Inc (TSE:KXS)
Here are some key facts for KXS:
- Market Cap: $4.71 billion
- Sector: Software
- PE Ratio: 175.63
- 52-week Trading Range: $119.48 – $173.50
- Dividend Yield: N/A
Kinaxis is a company that provides supply chain and operation planning software for enterprise solutions. It is based out of Ottawa, Ontario and was founded in 1984.
Its Supply Chain Planning Solutions software is considered an industry leader in the 2022 Gartner Magic Quadrant rating system. It is trusted by companies like Procter & Gamble, Ford, Nissan, Lockheed Martin, and Honeywell.
The company is a SaaS business that relies on consistent ARR or Annual Recurring Revenues from subscription fees. It has exhibited consistent customer retention and revenue growth on both a year-over-year and sequential quarterly basis.
5. Nuvei Corp (TSE:NVEI)
Here are some key facts for NVEI:
- Market Cap: $7.76 billion
- Sector: Global Payments Technology
- PE Ratio: 103.93
- 52-week Trading Range: $32.20 – $98.80
- Dividend Yield: N/A
Nuvei is a Montreal-based eCommerce and fintech company established in 2003 and went public on the TSX and the NASDAQ in 2020.
It is a software company that provides single API integration with websites to allow global payment services using over 500 different payment methods.
Some of its global partners include General Motors, Gucci, FTX Crypto, DraftKings, and Riot Games. Nuvei specializes in digital payment methods, which can include alternative payment methods like cryptocurrencies.
6. Docebo Inc (TSE:DCBO)
Here are some key facts for DCBO.TO as of March 2023:
- Market Cap: $1.72 billion
- Sector: Enterprise Learning Software
- PE Ratio: 186.16
- 52-week Trading Range: $31.66 – $66.10
- Dividend Yield: N/A
Docebo is a global enterprise learning software company originally founded in Italy. It trades on both the TSX and the NASDAQ exchanges in North America.
The company has nearly 3,000 global customers that use its enterprise learning system. It has a varied enterprise software stack that includes its LMS or Learning Management System, as well as tools for CRM, business intelligence, supply chain management, and overall office analytics.
It has partnered with some of the largest companies in the world, including Samsung, Amazon Web Services, Thomson Reuters, BMW, and L’Oreal.
7. Descartes Systems Group, Inc (TSE:DSG)
Here are some key facts for DSG:
- Market Cap: $8.86 billion
- Sector: Logistics and Enterprise Software
- PE Ratio: 64.82
- 52-week Trading Range: $72.94 – $106.40
- Dividend Yield: N/A
Descartes is a Waterloo, Ontario-based software company that provides logistics, supply chain, and cloud-based solutions for enterprises. It is dual-listed on both the TSX and the NASDAQ exchanges.
It is the world’s largest multi-modal and neutral logistics network, with over 24,000 customers in over 160 countries. Some of its global partners include Air Canada, UPS, FedEX, Coca-Cola, and Home Depot.
The Descartes GLN platform focuses on everything to do with logistics and transport management with a focus on B2B messaging and connectivity. Its revenues are based on recurring subscriptions, as well as a transactions-based model.
8. Absolute Software Corp (TSE:ABST)
Here are some key facts for ABST:
- Market Cap: $541 million
- Sector: Cybersecurity
- PE Ratio: N/A
- 52-week Trading Range: $8.81 – $17.20
- Dividend Yield: 3.09%
Absolute Software is a Vancouver-based endpoint and zero trust security company that trades on both the TSX and the NASDAQ.
It is a multinational company with nine offices across four different countries. Absolute’s 20,000 customers span 50 different countries and over 500 million endpoints.
The company has its security software embedded in devices manufactured by companies like Samsung, LG, Lenovo, Hewlett-Packard, Microsoft, Under Armour, and American Airlines.
9. Magnet Forensics Inc (TSE: MAGT)
Here are some key facts about MAGT.TO as of March 2023:
- Market Cap: $538 million
- Sector: Cybercrime Software
- PE Ratio: 377.22
- 52-week Trading Range: $14.89 – $45.20
- Dividend Yield: N/A
Magnet Forensics is a Waterloo, Ontario-based company that was established in 2010. It produces software tools to help law enforcement agencies fight cyber-related crimes.
Not only is the software used by law enforcement but corporations from a wide range of industries, including several Fortune 100 companies from information technology, telecommunications, healthcare, and finance.
The company was founded by an ex-police officer who worked in the digital forensic unit and found that the police did not have adequate cybercrime tools at their disposal.
As of 2023, Magnet has over 4,000 customers across more than 100 countries around the world.
10. Topicus.com Inc (CVE: TOI)
Here are some key facts for TOI as of March 2023:
- Market Cap: $7.09 billion
- Sector: Software
- PE Ratio: 87.57
- 52-week Trading Range: $61.47 – $112.36
- Dividend Yield: N/A
Topicus.com Inc is a Pan-European company that was spun off from another company on this list: Constellation Software. Constellation still owns about 30% of Topicus.
The company provides vertical software services to several different industries, and its operations span 14 different European countries with over 100,000 customers in 40 vertical markets.
It operates somewhat similarly to Constellation in acquiring, developing, and managing software platforms and operating them within its corporate umbrella.
How To Buy The Best Tech Stocks in Canada
All the Canadian tech stocks I discussed can be found on any Canadian brokerage. When trading TSX technology stocks, I prefer to use discount brokerages to save on trading commission fees. Here are two of my favourites for Canadian investors.
Questrade
This is Canada’s oldest and largest discount brokerage. Questrade offers everything from stocks and ETFs to even options trading.
Buying stocks on Questrade is cheaper than with big banks, as you can buy shares for as cheap as $0.01 per share.
Questrade
Trade stocks, ETFs, options, FX, bonds, CFDs, mutual funds, etc.
Get $50 trade credit with $250 funding
Low and competitive trading fees
No quarterly inactivity fees
Access to advanced tools and trading data
Top platform for advanced traders
Transfer fees waived
Wealthsimple Trade
This relatively new financial platform is owned by the Power Corporation of Canada and has become a popular brokerage for younger investors.
Wealthsimple offers zero-commission trading for stocks and ETFs through its desktop or mobile apps. To access real-time stock quotes, you can subscribe to the $10 monthly Plus package.
Wealthsimple Trade
Trade stocks, ETFs, and options
Excellent trading platform for beginners
Access to various products and accounts
Transfer fees waived up to $150
Are Tech Stocks a Good Investment?
Canadian tech companies can be great investments as long as we are in the right market environment.
Tech stocks have higher long-term capital growth opportunities as long as the company continues to execute. You will notice that tech stocks typically trade at high price multiples, especially if they are not yet profitable as a company.
With that being said, tech stocks generally do not pay dividends, so the allure of investing in them is for outsized gains that will outperform the market.
The list of the top 10 Canadian tech stocks is not meant to be financial advice. It is meant to be a place to start your investment research before deciding on your own investment choices.
Downsides of Investing in Tech Stocks
As with any sector, tech stocks have their downsides. In a rising interest rate environment, future revenue multiples are slashed.
Not every tech company is going to be a winner. Some will lose to superior businesses, given how competitive and crowded the tech sector is.
Even within the tech industry, it helps to diversify your investments. Include stocks in different sub-sectors like cybersecurity, semiconductors, and cloud computing.
While tech stocks can rise rapidly, they can fall just as fast after a bad quarter or change in outlook. Always stay up to date with the latest news and earnings reports from the companies you hold.
What Are the Best Tech ETFs?
In a sector as broad as the Canadian technology industry, I wouldn’t blame you if you had trouble choosing just a handful of stocks to buy. Luckily, there are technology ETFs that provide you with exposure to the entire sector. Here are a few of my favourites:
- iShares S&P/TSX Capped Information Tech ETF (TSE: XIT)
- TD Global Technology Leaders Index ETF (TSE: TEC)
- BMO NASDAQ 100 Equity Index ETF (TSE: ZNQ)
- Invesco NASDAQ 100 Index ETF (TSE: QQC)
- iShares NASDAQ 100 Hedged to CAD ETF (TSE: XQQ)
- Harvest Blockchain Technologies ETF (TSE: HBLK)
These provide ample exposure to Canadian tech stocks and global tech stocks as well. They all trade on the Toronto Stock Exchange, so Canadian investors can avoid foreign exchange fees as well.
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Conclusion
Over the past few decades, technology stocks have become a popular industry for investors to buy into.
Technology stocks can provide massive long-term growth and have handily outperformed the broader markets.
The name of the game with Canadian tech stocks is long-term capital growth and not stability or dividend distributions.
Canadian investors can add exposure to tech stocks to create a part of their diversified portfolio of equities. My suggestion is to check out discount brokerages like Wealthsimple Trade or Questrade to save on commission fees.
FAQs
Of the stocks I covered in this article, Shopify has the largest market capitalization on the TSX. Even though its stock price and market cap have fallen quite a bit, Shopify remains the largest tech company in Canada.
Generally not. Technology stocks are not known for their dividend payments. Even though some of them, like Constellation Software and Absolute Software Corp, both pay quarterly dividends, the vast majority of tech stocks do not pay dividends to shareholders.
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