The TSX Index has attracted criticism from investors due to its heavy weighting in energy and materials and its light exposure to the technology sector. By contrast, the top U.S. indexes boast huge weightings in tech. The TSX may have a small tech offering, but that does not mean that it does not boast some explosive stocks.
Kinaxis (TSX:KXS) has soared to new heights in 2020. Shares of the Ottawa-based company have climbed 122% over the past year as of close on May 11. The stock is up 49% over the past three months.
The COVID-19 pandemic has ravaged many sectors of the Canadian and global economy, but it has also bred opportunity for other businesses.
Supply chains have been disrupted in this crisis. Kinaxis’ supply chain and operations planning software is world class, and it has attracted customers like Unilever, Toyota Motors, Ford, and others. This recent disruption has illustrated the need for many companies to optimize their supply chains. Kinaxis’ services will continue to be in high demand.
In its first quarter 2020 results, Kinaxis reported total revenue growth of 15% to $52.8 million. However, adjusted EBITDA fell 6% year-over-year to $15 million. Kinaxis is a very promising growth stock, but investors should be cautious right now. It boasts a sky-high price-to-earnings ratio and it last had an RSI of 82, putting the stock well into technically overbought territory.
