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It might not be until October, but 2021 is already drawing to a close. This is particularly the case when it comes to new initial public offerings (IPOs). The tech sector was on fire last year, and last year there were still several new tech stocks worthy of investor attention. However, there was certainly one that stood out. Not only is it the one I would buy now based on its business model, but Motley Fool investors can compare it to a tech stock in the market. TSX today who made very good.
The top among technology stocks
I must choose Convergent technological solutions (TSX: CTS) as my top pick among tech stocks with IPO this year. The company is a provider of hybrid computing and software solutions throughout North America. It has a strong sustained activity providing hardware, software and managed services to businesses and government institutions. But its main axis of growth this past year? Acquisitions.
More recently, the company added LPA Software Solutions to its shopping list. This gives it a massive presence in the United States in the business analysis department using artificial intelligence data collection. The deal brings hundreds of customers to Converge and marks the 24th deal Converge has made since October 2017, according to the company’s statement. Clearly, something is working.
The company’s recent earnings report was nothing short of impressive, with revenues up 52% year-over-year, gross profit up 43% and Adjusted EBITDA up 86%. That did not include the millions in revenue generated from acquisitions announced in June but not yet closed. Yet even with stocks up 72% since their addition to the TSX today on February 11, 2021, stocks have fallen from all-time highs of around $ 13 per share. This gives Motley Fool investors a solid buying opportunity among tech stocks.
Value and potential
First of all, the value. Converge is no bargain when it comes to its P / E ratio, currently in triple digits thanks to its acquisition history. However, a P / N ratio of less than five is more beneficial for investors. And then there’s the future potential to consider, analysts say. Analysts believe the stock should outperform among tech stocks. His long-term budget targets have given a lot of confidence in his growth path, aiming to reach $ 5 billion in revenue by the end of 2025. In addition, he also wants to achieve $ 500 million in EBITDA from here there.
While this isn’t happening exactly, it shows a commitment to the goal, seen over the past year. This led to strong growth in stocks, creating an opportunity for even more stock appreciation, analysts said. Management remains confident that it can stay the course in terms of mergers and acquisitions, and has had incredible success so far. She may even be able to recreate that by going through Europe. So stocks currently have upside potential to this all-time high of $ 13 per share.
And it’s not like this has never happened with tech stocks before. A $ 10,000 investment in Constellation Software in 2006 would be worth $ 1.6 million today. And Constellation has an incredibly similar business model, acquiring and growing through its dedicated software department. The shares entered the market in single digits and are now in the four-digit range. This could certainly be the case for Converge in 15 years.
If Motley Fool investors are looking for tech stocks that you can still buy on the ground floor, I would highly consider Converge. The company is poised for stellar and stable growth over the next several years, at least on the TSX today. And taking Constellation as an example, it could continue to soar for decades to come.