Written by Christopher Liew, CFA at The Motley Fool Canada
A stock exchange is the supermarket of stocks, and people buy stocks to make money or earn passive income. Making money means buying low and selling high, the mantra of traders. On the other hand, earning passive income refers to regular payouts received from dividend stocks.
The Toronto Stock Exchange (TSX) is Canada’s principal stock market. It has 11 primary sectors with a combined market capitalization of more than $4 trillion. Investors, whether new or old and regardless of the amount of capital to invest, have equal chances of success.
However, you should be extra careful if you’re new to stock investing because it comes with risk. Thus, the advice to beginners is to start small and get a feel of the market.
Converge Technology Solutions (TSX:CTS) and Thinkific Labs (TSX:THNC) are the best options in November 2023. Both stocks trade at less than $5 per share, but have growth potential. The respective businesses thrive in the current macroeconomic environment.
Technology is the best-performing sector entering the last month of 2023. The year-to-date gain is 44%, besting 10 primary sectors and the broader market’s 3.3% positive gain. At $3.72 per share (-18.43% year-to-date), Converge Technology trades at a discount, but it shouldn’t be for long.
The $762.3 million software-enabled company provides IT and cloud solutions. Its offerings to various industries include advanced analytics, application modernization, cloud platforms, cybersecurity, digital infrastructure, and the digital workplace.
In Q3 2023, revenue and gross profit jumped 38% and 25% respectively to $710.1 million and $174.1 million versus Q3 2022. The Group’s CEO, Shaun Maine, said, “The structural demand tailwinds of planning, implementing and monitoring complex technology projects, whether AI, cloud or cyber-related, are driving a higher quality revenue mix.” For Q4 2023, the gross profit guidance is between $177 million and $184 million.
Market analysts recommend a buy rating for Converge Technology. Their 12-month average price target is $5.33, a return potential of 43.2%. The overall return should be higher if you include the modest 1.2% dividend yield. This tech stock is a rare gem because few growth-oriented companies pay dividends.
Thinkific Labs belongs in the high-growth technology sector, too. This $429.3 million company’s Software-as-a-Service (SaaS) platform helps clients in North America and internationally create, market, sell, and deliver their online courses.
The 11-year-old firm went public in April 2021 and is one of the top-performing stocks in 2023. At only $2.64 per share, the market-beating year-to-date return is 40.4%.
In Q3 2023, revenue increased 12.7% to US$15 million versus Q3 2022. Notably, net loss narrowed 91.2% year over year to US$931.9 thousand. “We are now seeing the payoff from our decisive actions over the last 18 months, resulting in our best quarter as a public company,” said Greg Smith, CEO of Thinkific.
Smith adds, “Our commitment to EBITDA profitability has paid off, and I’m immensely proud that we achieved this ahead of schedule and in combination with revenue growth. The revenue guidance for Q4 2023 is between US$15.2 million and US$15.4 million.
The first attempt of beginners in the stock market should be rewarding and satisfying. Converge Technology or Thinkific Labs are cheap options but are well-positioned to deliver superior returns.
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