Latest news with #ConstellationSoftware
Yahoo
12 hours ago
- Business
- Yahoo
1 AI Stock Up 11% to Own in a TFSA for Long-Term Growth
Written by Amy Legate-Wolfe at The Motley Fool Canada When it comes to investing in artificial intelligence (AI) for the long term, it's easy to get caught up in the hype. Flashy start-ups and soaring valuations can make it tempting to bet big on the next breakthrough. But in a Tax-Free Savings Account (TFSA), where compounding over decades matters more than chasing momentum, I'd go with something a little different. I'd choose Constellation Software (TSX:CSU), a Canadian tech powerhouse that has not only stood the test of time but continues to grow through a methodical and profitable approach. If I could only own one AI stock in a TFSA, this would be it. Here's why. Constellation isn't the kind of company that grabs headlines. It's not building robots or developing large language models. Instead, it acquires and operates vertical market software companies that serve niche industries, from healthcare to utilities to municipal governments. These businesses often have loyal customers, stable recurring revenue, and strong pricing power. Over time, Constellation has acquired hundreds of these firms, knitting together a global empire of reliable cash flows. That acquisition model is the secret sauce. In its most recent quarterly earnings report for Q1 2025, Constellation reported revenue of US$2.6 million, up 13% from the same period in 2024. Net income came in at US$115 million, or US$5.44 per diluted share, compared to US$105 million or US$4.95 a year earlier. Operating cash flow reached US$827 million, and free cash flow available to shareholders hit US$510 million. That kind of financial strength is rare in tech, especially among companies with a hand in AI. Where AI comes into play is subtle, but important. Constellation's companies increasingly incorporate AI and automation into the software they offer. It might be predictive analytics for logistics, intelligent scheduling for healthcare, or fraud detection for financial services. These aren't moonshots, but practical tools that improve efficiency and make customers stickier. AI in this context becomes a value-add, not a distraction. The company also completed aggregate cash acquisitions of US$94 million (US$133 million including deferred payments) during the quarter and invested US$174 million to acquire 9.99% of Asseco Poland. That speaks to the size of its war chest and its ongoing commitment to expand. Management has always been disciplined in how it spends. It avoids bidding wars and prefers to buy companies with long-term potential, even if it means slower growth on paper. This conservative strategy keeps returns strong and risks in check. Of course, no stock is perfect. The share price, sitting near $5,000, isn't exactly approachable for everyone. It trades at a premium valuation, with a high price-to-earnings (P/E) ratio. Some investors may hesitate, thinking the growth has already been priced in. And it's true that organic growth remains in the low single digits, with acquisitions doing most of the heavy lifting. But that's also why it works, the model is repeatable, and management hasn't strayed from what it does best. The dividend is modest at US$1.00 per share quarterly, but that's not the draw. This is a long-term growth story built on free cash flow and compounding. The dividend is more of a bonus, not the main event. In a TFSA, where income isn't taxed and gains build up quietly over years, Constellation's steady growth becomes even more powerful. There are sexier AI stocks out there, no doubt. But many come with hype, losses, and hope. Constellation comes with revenue, profit and a 30-year track record of smart acquisitions. It doesn't try to reinvent the wheel; it just buys the best wheels and makes them better. For those looking to hold a single AI-related stock in a TFSA for decades, it's hard to beat Constellation Software. It's not just a tech stock. It's a disciplined compounder with exposure to some of the most important technological trends, including AI, while remaining grounded in fundamentals. It might not be flashy, but it works. The post 1 AI Stock Up 11% to Own in a TFSA for Long-Term Growth appeared first on The Motley Fool Canada. Before you buy stock in Constellation Software, consider this: The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Constellation Software wasn't one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years. Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the 'eBay of Latin America' at the time of our recommendation, you'd have $24,927.94!* Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 30 percentage points since 2013*. See the Top Stocks * Returns as of 6/23/25 More reading 10 Stocks Every Canadian Should Own in 2025 [PREMIUM PICKS] Market Volatility Toolkit A Commonsense Cash Back Credit Card We Love Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Constellation Software. The Motley Fool has a disclosure policy. 2025 Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
5 days ago
- Business
- Yahoo
Why This Tech Stock Could Be the Next Shopify
Written by Amy Legate-Wolfe at The Motley Fool Canada Shopify (TSX:SHOP) is often the gold standard when it comes to Canadian tech success. It went from a little-known e-commerce company to one of the biggest stories on the TSX. So whenever a new name comes up with similar growth potential, it's worth paying attention. That's why (TSXV:TOI) is starting to get noticed. It doesn't have the flash of Shopify, but it has been quietly building something impressive. And for long-term investors, it could be one of the most exciting tech stocks on the market today. Topicus is a software company that focuses on vertical markets. That means it develops and acquires software tailored to specific industries like healthcare, education, and government. It's not trying to be everything to everyone. Instead, it wants to dominate smaller segments by offering exactly what those users need. This model allows it to grow quickly and maintain sticky customer relationships, since these tools are often deeply embedded into a company's day-to-day operations. The tech stock was spun out of Constellation Software in early 2021, and it has inherited some of the same strengths. Like its parent, Topicus is all about acquisition-led growth. It buys up smaller software firms, integrates them into its structure, and uses that foundation to continue growing. This buy-and-build strategy has worked well for Constellation, and Topicus is following a similar path. As of its latest report for the first quarter of 2025, Topicus posted revenue of €506 million, which is about $556 million in Canadian dollars. That was up from €451 million the year before. Net income came in at $37.4 million, with earnings per share (EPS) of $0.47. The tech stock continues to reinvest in operations and acquisitions, which can pressure short-term earnings but support long-term value creation. What makes Topicus exciting is its consistency. Over the past five years, it has grown earnings by 46% per year and revenues by 22% annually. Its return on equity sits at a strong 22.4%, and its profit margin is around 7.3%. Those are healthy numbers for a company in growth mode. These show it isn't just burning cash to expand. It's building a sustainable business with real profits and strong cash flow. The tech stock trades at a high valuation at about 93 times trailing earnings. That might scare off some investors, but it reflects the market's belief in Topicus' growth potential. Its market cap has now reached $22.7 billion, which is impressive for a tech stock still listed on the TSX Venture Exchange. There are risks, of course. The tech stock is highly acquisitive, so it depends on finding good businesses to buy at reasonable prices. Integration risk is real. If one of its acquisitions underperforms or doesn't mesh well with the rest of the business, it could drag down results. Macroeconomic issues in Europe, where many of its customers are located, could also impact demand. Still, Topicus has shown it can handle these challenges. Its focus on vertical markets gives it a defensive edge. Even during tough times, many of its customers can't easily switch to another provider. The software is too deeply ingrained in their daily operations. That helps keep revenue steady and allows Topicus to continue scaling over time. It might not become the next Shopify in terms of market cap, but Topicus has a real chance to become a dominant force in its own space. It's already proving that growth and profitability can go hand in hand. For investors looking for a Canadian tech stock with a long runway ahead, Topicus is a name to watch. And maybe, just maybe, it's the next big thing. The post Why This Tech Stock Could Be the Next Shopify appeared first on The Motley Fool Canada. Before you buy stock in Constellation Software, consider this: The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Constellation Software wasn't one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years. Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the 'eBay of Latin America' at the time of our recommendation, you'd have $24,927.94!* Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 30 percentage points since 2013*. See the Top Stocks * Returns as of 6/23/25 More reading Made in Canada: 5 Homegrown Stocks Ready for the 'Buy Local' Revolution [PREMIUM PICKS] Market Volatility Toolkit Best Canadian Stocks to Buy in 2025 Beginner Investors: 4 Top Canadian Stocks to Buy for 2025 5 Years From Now, You'll Probably Wish You Grabbed These Stocks Subscribe to Motley Fool Canada on YouTube Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Shopify and The Motley Fool recommends Constellation Software. The Motley Fool has a disclosure policy. 2025 Effettua l'accesso per consultare il tuo portafoglio
Globe and Mail
24-06-2025
- Business
- Globe and Mail
Best Canadian Stock Picks
Top Canadian Stocks Agnico Eagle Mines (AEM:CA) Agnico Eagle Mines is rated a consensus 'Buy' by analysts, supported by robust fundamentals and favorable gold market conditions. The consensus 12-month price target averages around C$140, suggesting 10–15% upside from current levels. The company delivered record gold production, rising free cash flow, and strong shareholder returns in recent quarters, while maintaining a solid balance sheet with minimal debt. Despite trading at a premium valuation, AEM is backed by bullish technical signals and momentum, with analysts optimistic about continued earnings growth if gold prices remain strong. Brookfield Asset Management (BAM:CA) Brookfield Asset Management is rated a consensus 'Buy' by analysts, with a C$79 target forecast. The valuation is supported by strong financial performance and strategic growth initiatives. The company reported record fee-related earnings and significant fundraising success in recent quarters, boosting its fee-bearing capital to approximately $550 billion. BAM has expanded its presence in private credit and residential mortgage markets through acquisitions, enhancing its diversified asset base. While trading at a premium valuation with a P/E ratio around 40×, the stock's robust earnings growth and solid capital deployment position it well for continued long-term value creation. Constellation Software (CSU:CA) Constellation Software is rated a consensus 'Buy' from analysts, supported by strong revenue and earnings growth prospects driven by its successful acquisition strategy. The consensus 12-month price target averages around C$4,700, implying modest downside from current levels despite the stock trading at a high premium valuation. The company has demonstrated consistent cash flow generation and share compounding, though its elevated multiples reflect expectations for continued execution and integration success. While investors appreciate CSU's durable business model and growth potential, some caution remains due to the risks inherent in its acquisitive approach. Dollarama (DOL:CA) Dollarama Inc. is rated a 'Buy' by analysts, supported by strong financial performance and expansion plans. The consensus 12-month price target averages around C$191, suggesting modest downside from current levels. The company reported a 4.9% increase in comparable store sales and net earnings per share of C$0.98 for the quarter ending May 4, 2025, surpassing analyst expectations . Dollarama also reaffirmed its annual comparable sales expectations of a 3% to 4% rise . Analysts anticipate continued growth, with projected earnings per share of C$4.08 for FY2025 and C$4.51 for FY2026 . While the stock trades at a premium valuation, Dollarama's consistent performance and expansion initiatives contribute to its positive outlook Enbridge (ENB:CA) Enbridge Inc. is rated a 'Buy' by analysts, supported by strong financial performance and a robust dividend track record. The consensus 12-month price target averages around C$66, suggesting modest upside from current levels. In Q1 2025, Enbridge reported adjusted earnings per share of C$1.03, surpassing expectations, and achieved a record throughput of 3.2 million barrels per day on its Mainline system . The company also benefited from its recent acquisition of three utilities from Dominion Energy, which significantly increased its gas distribution earnings . Enbridge maintains a strong dividend yield of approximately 5.8%, with a 53-year history of dividend payments . Despite trading at a premium valuation, Enbridge's diversified infrastructure and regulated revenue streams position it well for continued growth and stability Fortis (FTS:CA) Fortis Inc. is a Canadian electric and gas utility company, rated as a 'Hold' by analysts. The consensus 12-month price target is C$66, suggesting it is fairly valued from current levels. In Q1 2025, Fortis reported earnings per share of C$0.97, slightly exceeding expectations, and reaffirmed its full-year EPS guidance of C$3.34 . The company offers a dividend yield of approximately 3.8%, with a history of annual increases over the past five decades . Fortis is executing a $26 billion capital program aimed at expanding its rate base from C$39 billion in 2024 to C$53 billion by 2029, supporting projected annual dividend growth of 4–6% . While the stock trades at a premium valuation, Fortis's diversified infrastructure and regulated revenue streams position it well for continued growth and stability. Hydro One (H:CA) Hydro One Limited is a leading Canadian electricity transmission and distribution company, rated a 'Buy' by analysts. The consensus 12-month price target is C$49, suggesting the stock is failry valued from current levels. In 2024, Hydro One reported revenues of C$8.5 billion, a 6.5% increase from the previous year, and net income of C$1.2 billion, reflecting steady growth. Earnings per share (EPS) rose to C$1.93, up from C$1.81 in 2023, supported by higher rates and effective cost management. The company maintains a dividend yield of approximately 2.5%, with a 64% payout ratio, indicating a balanced approach to returning value to shareholders while investing in infrastructure. Hydro One is actively expanding its grid with projects like the Chatham to Lakeshore and Wawa to Porcupine transmission lines, positioning itself for long-term growth amid Ontario's electrification efforts. While trading at a premium valuation, Hydro One's stable earnings, low beta (0.33), and strategic investments make it an attractive option for investors seeking reliable income and growth potential Manulife Financial (MFC:CA) Manulife Financial Corporation is rated a 'Hold' by analysts, supported by strong financial performance and growth prospects in Asia. The consensus 12-month price target averages around C$48, suggesting approximately 7–8% upside from current levels. In 2024, the company reported revenues of C$29.99 billion, a 10.08% increase from the previous year, and earnings of C$5.07 billion, a 5.71% increase. Core earnings exceeded C$7 billion for the first time, driven by significant new business activity and strategic portfolio reshaping through major reinsurance transactions. The company also announced a 10% increase in common share dividends and a new buyback program targeting up to 3% of outstanding shares. Manulife maintains a strong capital position with a leverage ratio of 23.9%, below its 25% target, and holds an 'A' rating from S&P Global. Analysts anticipate continued growth, with projected earnings per share of C$4.18 for FY2025 and C$4.57 for FY2026. While the stock trades at a premium valuation, Manulife's diversified operations and strategic initiatives position it well for sustained growth and stability Shopify Inc. (SHOP:CA) Shopify is rated a 'Buy' by analysts, driven by strong revenue growth and expanding e-commerce market share. The consensus 12-month price target averages around C$137, implying significant downside potential from current levels. In recent reports, Shopify posted a 25.8% increase in total revenue and a 50% year-over-year surge in gross merchandise volume, reflecting rapid merchant adoption and platform scalability. The company continues to invest in innovative tools and global expansion, reinforcing its leadership in online retail solutions. While competition and evolving consumer trends pose risks, Shopify's solid financial performance and growth strategy position it well for sustained long-term growth. Overall, analysts remain optimistic about Shopify's prospects amid the ongoing digital commerce boom. Teck Resources (TECK-B:CA) Teck Resources is rated a 'Buy' by analysts, supported by strong financial performance and growth prospects in copper and zinc production. The consensus 12-month price target averages around C$64, suggesting approximately 21% upside from current levels. In Q1 2025, Teck reported adjusted EBITDA of C$927 million, more than double the previous year, and net income of C$370 million, a significant turnaround from a loss in Q1 2024. Copper production increased by 7% to 106,100 tonnes, and zinc production exceeded guidance with 90,800 tonnes sold from the Red Dog mine. The company returned C$505 million to shareholders through share buybacks and maintains a strong balance sheet with C$10 billion in liquidity and a net cash position of C$764 million. Analysts highlight Teck's strategic focus on copper, positioning it well for long-term growth amid global demand for clean energy metals. However, challenges such as planned maintenance shutdowns and weather-related disruptions at the Quebrada Blanca mine may impact near-term production. Overall, Teck's robust fundamentals and strategic initiatives support a positive outlook for the stock.
Yahoo
21-06-2025
- Business
- Yahoo
How to Build a $7,000 TFSA Position That Grows Year After Year
Written by Puja Tayal at The Motley Fool Canada Your Tax-Free Savings Account (TFSA) can be your go-to account for wealth creation as it allows your investment to grow tax-free, and you can even withdraw any amount at any time tax-free. No doubt, you have heard stories of investors who made millions by investing $10,000 in a company. Imagine that million-dollar investment being tax-free. If only you had invested $10,000 in Apple, Nvidia, or Constellation Software in 2005, you would be a multi-millionaire. There is no point in reminiscing about the lost opportunities of the past because that investment income would be taxable. The TFSA was introduced in 2009. From today's standpoint, ask yourself what the world will look like 20 years from now. The above three stocks that made their shareholders millionaires changed the way we work, communicate, and operate. Artificial intelligence (AI), self-driving cars, and digitization trends are shaping the future. Nvidia (NASDAQ:NVDA) is a no-brainer stock to buy and hold even at its current price of over US$144. Its graphics processing units (GPUs) are shaping the AI revolution. It is also at the forefront of the self-driving car revolution. No matter which generative AI rules the world – Chat GPT, Gemini, or DeepSeek – they are powered by Nvidia GPUs. Hence, Nvidia will thrive in the AI race. There are concerns about a slowdown in AI infrastructure spending. That is the nature of the hardware industry. Just like personal computers, there are upgrade and refresh cycles, when Nvidia sees strong enterprise orders. While the first cycle of AI infrastructure might be over, upgrades will follow, and demand will increase with each upgrade. Beyond the data centre, AI at the edge is the next big growth opportunity Nvidia is working on. Using AI to drive cars, automate industries, manage traffic, and create smart cities could drive the demand for Nvidia GPUs even more than data centres. You could consider investing $4,000 in Nvidia and see your money grow as technology evolves. The next growth stock is (TSXV:TOI), a spin-off of Constellation Software. Focused on the European market, has been acquiring vertical-specific software companies with strong and recurring cash flow from maintenance services. The trend of digitization and AI will make software an integral part of running any system. Mission-critical software will be indispensable and become the utility of the future. is a holding company of such mission-critical software companies. Instead of transferring the cash flow to shareholders, it is using that cash to buy more such companies. The new acquisitions add value to the company and increase the share price. Some acquisitions of are value additions, and some are overpriced. However, the consolidated returns are positive over time. In 2021, the company made losses as the tech sector was overvalued, but the effect of compounding has started kicking in. In a downturn, it acquires companies at attractive prices and increases returns. TOI is a stock to buy at the dip and hold for the long term for better returns. Compounding works best when given time. Canada is an export-led economy. Oil and minerals are commodities and may not generate long-term wealth, but a tech stock that makes logistics and supply chain management efficient can. Descartes Systems (TSX:DSG) has a wide range of customers across verticals that use its solutions – customs and compliance, global trade intelligence, inventory management, and route planning. Descartes makes logistics efficient for e-commerce, airlines, oil and gas, and many other companies. Now is a good time to buy Descartes stock as it dipped 15% in June over concerns of tariff uncertainty delaying decisions and slowing trading activity. As the tariff situation eases, trade will pick up and drive Descartes's stock upwards. Technology, the geopolitical situation, and globalization will further complicate trade, fueling demand for Descartes. The stock is poised to grow as its solutions remain relevant to trade complexities. Diversifying your TFSA growth portfolio across countries can help you mitigate country-specific risk. The post How to Build a $7,000 TFSA Position That Grows Year After Year appeared first on The Motley Fool Canada. More reading Made in Canada: 5 Homegrown Stocks Ready for the 'Buy Local' Revolution [PREMIUM PICKS] Market Volatility Toolkit Best Canadian Stocks to Buy in 2025 Beginner Investors: 4 Top Canadian Stocks to Buy for 2025 5 Years From Now, You'll Probably Wish You Grabbed These Stocks Subscribe to Motley Fool Canada on YouTube Fool contributor Puja Tayal has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends The Motley Fool recommends Apple, Constellation Software, Descartes Systems Group, and Nvidia. The Motley Fool has a disclosure policy. 2025 Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
20-06-2025
- Business
- Yahoo
How to Make Your $7,000 TFSA Contribution Work Harder This Year
Written by Chris MacDonald at The Motley Fool Canada The Tax-Free Savings Account (TFSA) investing vehicle is one of the best, and perhaps most under-utilized, tools available to Canadian investors. This account allows Canadian investors to put $7,000 in after-tax dollars to work in an investing account, with the corresponding growth and dividend income provided by the investments in this account eligible to be pulled out tax-free at any point in time. For those planning for retirement, having access to a tax-free chunk of capital when it comes time to retire is a big deal. That goes double for those who plan to work into retirement, and/or those who expect to have a higher tax burden down the line. With the way fiscal spending is trending everywhere, that's a bet many may be willing to make. Here are three tips investors looking to maximize the performance of their TFSAs may want to think about right now. Generally speaking, most financial planners would advise investors to first consider which types of investments they're thinking about including in their TFSA. A very high-growth stock such as Shopify (TSX:SHOP) or Constellation Software (TSX:CSU) that has seen rapid price appreciation in recent years would be disproportionately rewarded by being held in such a fund. That's simply due to the fact that such stocks have continued to compound over time, and that capital appreciation investors would have seen from investing in such stocks early on would have resulted in most of the value of their current holdings being in price appreciation. In a TFSA, this price appreciation is tax-free. That said, putting all of one's TFSA funds in one or two particular stocks is a strategy most financial experts would also be up in arms about. A TFSA does disproportionately benefit investors who want to pick growth stocks that perform well. The key is that such holdings need to perform, and there are no guarantees on this front. Thus, holding a broader basket of diverse growth stocks may be the optimal choice for most passive long-term investors. Whether it's a growth-focused ETF or mutual fund, supplementing single-stock picks is a strategy I'm personally in favour of, and it is a strategy I think most investors should consider. One of the problems with a TFSA (which is similar to a Roth 401(k) in the U.S.) is the relative ease at which investors can pull their capital out of a TFSA when needed. While liquidity is great (and that's a feature of this investment vehicle), in terms of saving for retirement, excessive withdrawals over time from a TFSA can really degrade the long-term value that can come from holding high-quality growth stocks in this account. As such, I think the prudent advice for most investors is to put whatever possible into a TFSA (preferably to the maximum allowed), and let these funds sit there for as long as possible. That's the advice most financial experts would provide, and it's easier said than done. But for those who are patient and willing to let their winners ride, this is the account that makes the most sense to do so. The post How to Make Your $7,000 TFSA Contribution Work Harder This Year appeared first on The Motley Fool Canada. More reading Made in Canada: 5 Homegrown Stocks Ready for the 'Buy Local' Revolution [PREMIUM PICKS] Market Volatility Toolkit Best Canadian Stocks to Buy in 2025 Beginner Investors: 4 Top Canadian Stocks to Buy for 2025 5 Years From Now, You'll Probably Wish You Grabbed These Stocks Subscribe to Motley Fool Canada on YouTube Fool contributor Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Shopify. The Motley Fool recommends Constellation Software. The Motley Fool has a disclosure policy. 2025
