When looking at the universe of available Canadian growth stocks to choose from, investors may have to scour longer and harder than in many markets for examples of leaders in the machine-learning space.
Widely considered to be a subset of the artificial intelligence (AI) revolution, what machine-learning technology does is it improves on itself over time. Think of programs writing programs (what we all heard about in The Matrix) a long while back.
Various companies have instilled impressive machine-learning capabilities into their business model. That said, I think Canadian tech company Kinaxis (TSX:KXS) could be the leader in this space, at least for now.
Let’s dive into why this is my top machine-learning pick investors should pay attention to right now.
What does Kinaxis do?
Kinaxis is perhaps best known for its RapidResponse platform, which ensures supply chain optimization for its growing list of clients. This is, in and of itself, an intriguing space to operate in, and many investors have taken a close look at this company for this reason.
However, Kinaxis has been working diligently behind the scenes (and has improved its messaging over time as well) around integrating machine learning into its platform. The idea behind this move is to provide its customers with even more actionable insights, more accurate predictive analytics, and support in the automation of what can be very complex systems.
As supply chains continue to get more complex, and we see the global economy expand (with or without tariffs), a company like Kinaxis should have the upper hand in growing its base of business over time.
What do the fundamentals say?
Kinaxis is one of the preeminent software-as-a-service (SaaS) companies in Canada, and I’ve long thought it has a more robust runway for growth than the market provides this stock with.
Kinaxis has seen its stock price surge more than 20% over the past year. That said, this isn’t a cheap stock by any stretch of the imagination. With a price-earnings ratio above 450 times, investors are clearly paying up for future growth.
But as Kinaxis’s bottom-line growth rate improves, this is a stock I think has plenty of runway to grow into this valuation. And importantly, a market capitalization of just $5.7 billion means there’s plenty of room for upside, if the company can hit the ball out of the park with continuing improvements in its AI-driven supply chain management suite.
Bottom line
Over the long term, Kinaxis is one of those top-tier growth stocks I think could be an under-the-radar stock for most investors. Those looking for ways to play the machine learning and AI space should at least give this stock a look. That’s my take right now, at least.