The main North American indexes made one of the strongest comebacks in history during the first stock market session of the week.
Updated yesterday at 5:29 p.m.
While the technology sector has been battered for some time on the markets, it is at the NASDAQ that the most spectacular about-face has taken place. Down 5% at midday, the NASDAQ finally closed up almost 1%.
And it is in Quebec that one of the most beautiful examples of the day is found. Lightspeed’s stock was losing 12% of its value at one point after falling as low as $33. The stock then turned around to end the session green, up 1%, at $38.25. The title of the Montreal cloud computing company remains very far from its peak of $165 reached in the fall, but continues to make you think.
It’s a security to consider if an investor is “ready to take the risk”, launches the portfolio manager and wealth management advisor affiliated with National Bank Financial Cimon Plante.
“The stock is essentially back to its pre-pandemic price but since that time the company has made acquisitions and pivoted its business model towards payment. In a world where we are deconfining, their system of services for retailers and restaurateurs will be relevant. A position in this title can be interesting,” he says.
This manager, who has a clientele essentially made up of retail investors, is not too worried about the mood of the markets.
“If there was a long-term structural factor that would affect corporate valuations, you would see it in the private sector as well and that is not the case. Appraisals are holding up in the private sector. It’s starting to open the door to investment opportunities on the stock market. »
Cimon Plante says he doesn’t get many calls from concerned customers. “They experienced the volatility of March 2020 which was more abrupt. They are therefore quite resilient. »
The current situation reminds him a little of 2018 when the tech sector fell by approximately 15%. “It was an opportunity to invest,” he says.
“The consumer is in good shape. Many companies want to invest massively and pivot their business model in an unconfined world. The backstory is relatively good. »
Omicron, inflation, Ukraine. There are many reasons to try to explain volatility and stock market revaluation.
“Everyone realizes that interest rates will go up,” says Philippe Hynes, portfolio manager at Tonus Capital.
“It puts pressure on the multiples that investors are willing to pay for future profits. »
The situation in Ukraine adds to the surrounding uncertainty, he adds. “It does not have a huge impact on the financial situation of companies in the short and medium term, nor on the rates in the short and medium term, but it could have an impact on oil and natural gas if Russia takes certain actions. . The market is nervous, and any negative news will be amplified. »
Philippe Hynes believes that the context is becoming very favorable for small cap stocks.
“Last year was the worst relative year in 20 years for small caps. Relative valuations are where they were in the late 1990s. Megacaps have been stealing the show for a few years, and investors are buying without really considering valuations. We are starting to see that investors are looking at valuations and financial statements. There can be a rotation of capital into small caps, and it wouldn’t take a huge transfer to make a big difference. »
Among small caps, he particularly likes Vivid Seats, an online ticket resale platform for shows and sporting events. “It’s a good way to position yourself for a return to normal post-pandemic. Closer to home, he mentions Haivision, a Montreal-based provider of video streaming solutions. IBI Group is also on its radar. “This architecture and engineering firm is performing well but continues to be priced at a discount to larger companies like SNC-Lavalin and WSP. The AutoCanada dealership is another business he likes. “Car sales continue to be constrained by very low inventories, so dealer profits are very strong. »
Cimon Plante, for his part, continues to like the technology sector, in particular that of software and the Internet. “The valuation multiples of Microsoft, Amazon, Facebook and Google are really, really great,” he says.