Financial technology concept.

Growth investors are having a horrid time this year. Even the high-quality names that seemed well placed for growth last year have witnessed massive pullback so far. And notably, the bottom could still be far, given the bigger rate hikes and rising recession fears. As a result, not all steeply corrected stocks are a buy at this point. Here are three top TSX tech stocks I find attractive at these levels amid the tech rout.

Constellation Software

While TSX tech stocks have dropped 35% this year, Constellation Software (TSX:CSU) stock has declined a mere 15%. Despite the lofty valuation, CSU stock has maintained its strength amid the massive tech correction, notably beating peers.

Constellation Software has a diversified revenue base that caters to both public and private sector customers. It buys smaller vertical market software companies that have huge growth potential. It has seen superior revenue and earnings growth for the last several years, notably beating the industry average. Driven by consistent profitability and an expanding fleet, CSU stock has returned 200% in the last five years.

CSU management has been quite aggressive on the acquisition front in the last couple of quarters and completed around 30 deals in Q2 2022. Its balance sheet strength and a keen eye for catching potential companies have played out well for the company so far.

Considering its unique M&A strategy, solid earnings prospects, and a recent correction, CSU stock offers attractive growth potential for long-term investors.

Nuvei

Another TSX tech name that has been notably weak since last year is Nuvei (TSX:NVEI)(NYSE:NVEI). It has lost 75% from its 52-week high of $180 in September 2021.

Considering its towering valuation and a brutal short-seller’s report, such a pullback was expected. However, Nuvei has shown consistent revenue growth with a healthy margin for the last several quarters. The management continues to see above-average financial growth in the long term.

The Canadian payment processing platform caters to a large addressable market that includes e-commerce websites, crypto platforms, and even sports betting companies. It has a diversified revenue base and offers appealing growth prospects.

Shopify

Canada’s top tech stock Shopify (TSX:SHOP)(NYSE:SHOP) has tumbled 78% since last November, with more than $200 billion of its market cap vanishing. Notably, SHOP stock could continue to trade weak in the short term with interest rate hikes approaching. However, if you are planning to purchase in multiple tranches, this seems to be an attractive entry point.

It’s now no secret that Shopify may not see pandemic-era growth soon. But that does not make it an unappealing bet. On the contrary, it will still likely see above-average growth compared to peers largely due to its massive merchant base, secular industry tailwinds, and expanding product base.

Although e-commerce spending could moderate from its pandemic levels, it will still continue to grow in the long term. In addition, its fulfilment network could be the next big growth driver in the rapidly emerging industry.

SHOP stock is currently trading at $50, its 30-month low. It touched $38 levels this month amid broader market uncertainties. Rising rates and roaring inflation could weigh on growth stocks. But discerning investors could consider entering at these levels.

The post 3 Stocks I’m Buying During a Tech Stock Correction appeared first on The Motley Fool Canada.

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The Motley Fool has positions in and recommends Nuvei Corporation and Shopify. The Motley Fool recommends Constellation Software. Fool contributor Vineet Kulkarni has no position in any of the stocks mentioned.

By sahil

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