Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

My 3 Top Reasons to Buy Lightspeed Stock This summer

Published 2021-07-08, 12:39 p/m
Updated 2021-07-08, 12:45 p/m
My 3 Top Reasons to Buy Lightspeed Stock This summer

My 3 Top Reasons to Buy Lightspeed Stock This summer

Lightspeed POS (TSX:LSPD)(NYSE:LSPD) stock is trading on a slightly negative note for the last couple of sessions. The tech stock has underperformed the broader market this year despite a solid trend in its recent financials. However, several other factors could help this tech stock stage a big rally in the second half of the year. Let’s take a closer look at three key factors that make Lightspeed one of the best tech stocks to buy on the TSX today.

A solid ongoing trend in recent financials Despite COVID-driven operational challenges, Lightspeed’s sales growth continued to remain strong last year. In its fiscal year ended in March 2021, its sales rose by nearly 84% from a year ago to US$222 million.

Its adjusted gross profits surged to US$127.3 million for the fiscal year 2021 — much higher compared to US$77.4 million in the previous fiscal year. After some recent acquisitions, LSPD’s had more than 140,000 customer locations at the end of the March quarter.

In the last fiscal year, Lightspeed exceeded its previously established sales guidance and beat analysts’ expectations. In the March quarter, the company’s organic software and transaction-based revenue jumped by about 48% year over year, while the Lightspeed Payments segment also posted solid growth.

Solid future outlook Clearly, the existing trend in Lightspeed’s sales and overall business growth is very strong. But its future growth prospects look even brighter. Earlier this year, Lightspeed partnered with Google (NASDAQ:GOOGL) to help small businesses improve their product discovery on the Google search engine. As a result of this partnership, Google search results will reflect live inventory levels of merchants with the help of LSPD’s legacy platform.

Apart from improving merchants’ locations discovery on Google, Lightspeed will also allow merchants to manage their advertising spend within its platform. LSPD’s founder and CEO Dax Dasilva believes that “This initiative will help small merchants compete with large online marketplaces.”

Overall, this partnership is likely to further enhance the usability of the company’s omnichannel commerce platform — making it more appealing for a small-businesses.

As the popularity of its platform continues to rise among small and medium-sized businesses, its business growth is likely to exponentially improve in the coming quarters. This could be one of the reasons why Bay Street analysts expect Lightspeed’s sales to more than double on a year-over-year basis in the next three quarters. Moreover, the ongoing reopening economies are likely to give another push to its sales growth.

LSPD stock is cheap Given all of these positive factors related to its future growth potential and the ongoing strong trend in its financials, Lightspeed stock deserves to outperform the broader market by a wide margin, in my opinion. Its stock rose by nearly 31% in the June quarter.

However, it still is trading with only 15.7% year-to-date gains — lower than the TSX Composite Index’s 16.4% gains this year so far. That’s why its stock looks cheap to me right now. This could be another reason why you may want to buy it right now.

The post My 3 Top Reasons to Buy Lightspeed Stock This summer appeared first on The Motley Fool Canada.

The Motley Fool owns shares of and recommends Lightspeed POS Inc. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.

This Article Was First Published on The Motley Fool

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.