1 Virtually Excellent Canadian Inventory Down 24% to Purchase and Maintain Endlessly

A virtually excellent Canadian inventory to purchase whereas it’s down has a easy recipe: the market will get grumpy, however the enterprise retains doing the boring, cash-generating work. You need recurring income, sticky prospects, and a product that also issues even when budgets tighten. You additionally need administration that makes use of money properly, like shopping for again shares and paying a dividend, as a substitute of chasing shiny distractions. When all of these line up, a drop in value can look extra like a sale than a warning.

OTEX

On the floor, OpenText (TSX:OTEX) might not appear to be it suits with its share value up. However in the long run, buyers nonetheless get worth. The tech inventory sells enterprise software program that helps massive organizations handle, safe, and use their info. It focuses on areas like content material administration, IT operations, buyer expertise instruments, and safety. This type of software program tends to embed itself into each day workflows, which makes prospects much less more likely to rip it out shortly.

Over the past yr, the storyline has been targeted and simplified. OpenText labored to sharpen its portfolio and its message round info administration in a synthetic intelligence (AI)-heavy world, together with its Aviator AI choices. It has additionally been lively round divestitures and streamlining, which inserts the concept of trimming what’s non-core and placing extra consideration on merchandise that may scale profitably. Management additionally shifted, with Ayman Antoun getting into the CEO function, and the Canadian inventory framed that transition as regular fairly than disruptive.

Valuation is the place the “virtually excellent whereas it’s down” pitch will get tempting. The market has priced OpenText extra like a mature, slower-growth software program firm than a fast-growth tech darling, which may make the shares look cheap relative to the money circulate profile. The danger is that development stays muted for longer than buyers need, competitors stays intense, and prospects take longer to modernize than the market’s persistence permits.

Earnings help

In its fiscal second quarter of 2026, OpenText reported whole income of $1.34 billion. Cloud revenues got here in at $478 million, up 3.4% yr over yr, and annual recurring revenues totalled $1.06 billion. It additionally posted quarterly enterprise cloud bookings of $295 million, up 18% yr over yr, which is a helpful sign that prospects nonetheless signal new and increasing cloud offers.

Profitability stayed chunky. OpenText reported adjusted earnings earlier than curiosity, taxes, depreciation, and amortization (EBITDA) of $491 million, which labored out to a 37.0% margin. Internet revenue got here in at $168 million, and diluted earnings per share (EPS) have been $0.66 on a usually accepted accounting practices (GAAP) foundation and $1.13 on a non-GAAP foundation. Money circulate mattered, too. Working money circulate was $319 million, and free money circulate was $279 million within the quarter. That’s the type of money technology that makes a buy-and-hold story really feel actual, even when the market stays unimpressed for some time.

Wanting forward, the outlook hinges on execution, not buzzwords. OpenText must hold shifting prospects to cloud subscriptions, hold bookings wholesome, and make its AI positioning really feel tangible in outcomes. Capital allocation additionally issues rather a lot right here. In February 2026, the Canadian inventory elevated its fiscal 2026 share-repurchase program to US$500 million, and stated it already bought about US$190 million of shares for cancellation as of Jan. 31, 2026. If the Canadian inventory can hold shopping for again shares whereas sustaining monetary flexibility, long-term holders can profit even during times when the inventory feels caught.

Backside line

In the long run, OpenText can look virtually excellent whereas it’s down if you would like a Canadian tech identify with actual money circulate, recurring income, and administration leaning into buybacks and portfolio focus. In the meantime, buyers nonetheless get a strong 4.41% dividend {that a} $7,000 funding turns into chilly, arduous money.

If you happen to might be affected person and also you need a regular compounder fairly than a headline inventory, OTEX has a reputable “purchase and maintain without end” angle when the value feels on sale.