Here’s the Next TSX Stock I’m Going to Buy

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Written by Amy Legate-Wolfe at The Motley Fool Canada

There are so many companies out there that offer a great deal. Many remain down despite having decades of historic growth behind them. Among them, the next TSX stock I’ll be considering has to be Open Text (TSX:OTEX).

Open Text stock offers a low risk option of getting into tech, with years of experience proving its worth. And with another strong earnings report under its belt, let’s look at why this might be a good TSX stock to consider today.

But first, earnings

Of course, if you’re here reading about Open Text stock, then we should go into the earnings surrounding the TSX stock. The company reported strong earnings last week, supported by organic growth and the eight consecutive quarter of cloud organic and annual recurring revenue organic growth.

Revenue was up 2.4% year over year, with cloud revenue increasing by 12%. Net income rose an incredible 192.7% to US$258.5 million. Furthermore, the company announced January 31 that it had closed the acquisition of Micro Focus, which should be up and running within the next six quarters.

Shares jumped about 6% on the news, where the TSX stock has remained since. It seems to have proven that just because you’re a tech stock, doesn’t mean you’ll do badly. And this stock has the numbers to back up this point.

A new growth phase

For those who haven’t been following Open Text stock, the TSX stock came on the market over the last few decades as an information management software company. It basically now adds on cybersecurity defences with its cloud-based services. And it’s done so well that companies ranging from Microsoft to Google have added the company to its roster.

In fact, Open Text stock went through a period over the last few years when it seemed new partnerships were announced quarter after quarter. Yet, with all this growth in business, there needed to be support for it as well.

This is precisely why it’s clear the TSX stock has entered a new phase of growth, one that could be supported by acquisitions, such as that of Micro Focus. Open Text remains a strong company with a stable balance sheet, open to even more growth opportunities in the future.

History repeating itself?

I mean this in a good way. Open Text stock is also a tech stock that’s been around for decades. That’s certainly more than many can claim these days. In the last two decades, the TSX stock has grown by 997%! And that’s even after the fall in the last year or so. What’s more, that’s a compound annual growth rate (CAGR) of 12.7%. Something you can lock up along with a 3.02% dividend yield.

So just because most tech stocks are doing poorly doesn’t mean all are. In fact, Open Text stock continues to be one of the few that continues to climb back after the fall, and has the earnings growth to prove it can continue climbing upwards.

Therefore, if there’s one TSX stock I’m looking to buy and hold for another two decades, it’s very likely to be Open Text stock.

The post Here’s the Next TSX Stock I’m Going to Buy appeared first on The Motley Fool Canada.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Fool contributor Amy Legate-Wolfe has positions in Alphabet. The Motley Fool recommends Alphabet and Microsoft. The Motley Fool has a disclosure policy.