Kalkine Media - The search for the best stocks to buy is ongoing, especially for investors seeking growth and value within the IT and tech sectors. While the tech sector is often associated with high-growth stocks, there are Canadian companies in this space worth considering for their value potential. Despite trading at higher multiples, these stocks offer sustainable earnings and cash flow expansion over time.
Constellation Software (TSX:CSU):
Constellation Software (TSX:CSU) is a Canadian tech giant specializing in developing and customizing software for private and public-sector banks. With a focus on building, acquiring, and managing vertical-specific businesses, Constellation has delivered remarkable returns to investors, with approximately 20,000% returns over the past two decades. This growth has been driven by a growth-by-acquisition model that is unparalleled in the industry.
The company's market capitalization of $75 billion places it in the large-cap realm, offering investors a defensive option within the high-growth tech sector with a beta of 0.8. Despite its size, Constellation maintains strong revenue growth of nearly 26% year over year and trades at a forward price-earnings multiple of 36 times, suggesting undervaluation relative to its growth prospects.
Open Text (TSX:OTEX) Corporation:
Open Text Corporation (TSX:OTEX) is another Canadian tech giant providing software solutions for archiving, aggregating, searching, and retrieving unstructured information. Specializing in enterprise information management (EIM) software, Open Text serves government entities, consumers, and businesses globally.
Open Text has recorded annual recurring revenue growth for 12 consecutive quarters, with its cloud bookings increasing by 63% year over year to $236 million. The company recently introduced Cloud Editions 24.1 and technological advancements in OpenText Aviator™, enabling multiple AI applications while ensuring governance, information management, and security.
For investors seeking exposure to AI, Open Text offers an attractive option with a forward price-earnings multiple of just 7 times and year-over-year revenue growth exceeding 70%. With its focus on innovation and expanding business operations, Open Text presents an opportunity for investors to earn higher dividends over the investment period.