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If there's one company that nearly every Canadian knows, investor or not, it's undoubtedly Shopify (TSX:SHOP). The company's shares soared to four-digit levels before the stock split, but have since stagnated in 2024, despite some growth in 2023.
So while Shopify stock has performed stellar thus far thanks to its rapid growth and market leadership position, recent performance and market conditions suggest a more cautious approach. Slowing growth, profitability challenges, and a high valuation have analysts recommending holding the stock for the time being.
Investors should keep an eye on Shopify's execution of its strategic initiatives and the broader economic situation as they evaluate the future opportunities for the company's stock. With that in mind, now may be the time to consider these other top tech stocks.
Tucows
Shopify stock isn't the only tech stock investors can look to for high growth. In fact, remember when investors were bragging about buying it at $35? You might have that chance with Tucows (TSX:TC) stock instead.
TC Stock is an internet services company that offers a variety of services including domain name registration, wholesale internet services, and communications solutions. The technology stock operates across multiple segments, including domain registration (through its subsidiary OpenSRS), retail domain services (Hover), and mobile services (Ting Mobile).
The company's domain registration and internet services generate a steady stream of recurring revenue, contributing to its financial stability. Additionally, TC Stock is expanding its fiber internet services with the aim of providing high-speed internet to underserved markets. This initiative coincides with the growing demand for reliable internet connections.
Recent developments
Recently, Tucows has experienced steady revenue growth driven by the expansion of its domain registration business and mobile and fiber optic internet services. The company's strategic focus on recurring revenue streams and market expansion positions it well for continued growth.
Additionally, Tucows has demonstrated robust revenue growth. For example, the company recorded revenue of $87.46 million in the first quarter (Q1) of 2024, an increase of 8.74% year-over-year. This growth is supported by strategic investments and consistent performance across business segments.
Additionally, analysts have a generally positive outlook on the company's shares due to Tucows' diversification of revenue sources and growth potential in the fiber optic internet market. One analyst recently initiated coverage with a “neutral” recommendation, acknowledging the company's promising growth but noting that cautious optimism is called for given market conditions.
What to see
The key for this tech stock is the need to achieve profitability. Tucows has been facing profitability issues in recent quarters. In Q1 2024, the company reported a net loss, continuing a trend from the previous quarter where investments in growth initiatives, particularly Ting Internet, impacted near-term revenue. Still, the net loss should be gradually eliminated as Q1 2024 revenue increased 8.74% year-over-year to $87.46 million.
The tech stock's shares have fluctuated depending on the market's reaction to the company's earnings reports and growth strategies. For example, shares were somewhat volatile after the company announced a large investment in Ting Internet as investors weighed long-term gains against concerns about short-term profitability.
But these investments should ultimately pay off. While Tucows continues to invest in long-term growth, recent revenue momentum has been hampered by short-term losses. As the market reacts to these developments, the stock price has been volatile. However, the company's solid revenue growth and strategic expansion efforts mean it is well-positioned to reap future benefits as these investments begin to pay off.
