Written by Christopher Liew, CFA at The Motley Fool Canada
Some might think that only chipmakers are the best investment options in the artificial intelligence (AI) space. AI applies to any business or industry wishing to optimize operations, elevate efficiencies, and attract investors’ attention.
Today, you can invest $1,000 in three Canadian AI stocks and hold for decades. Computer Modelling Group (TSX:CMG), Exco Technologies (TSX:XTC), and Coveo Solutions (TSX:CVO) see massive growth potential by leveraging the next-gen technology.
Computer Modelling, a dividend-paying tech stock, caters to and helps energy companies optimize production and de-risk hydrocarbon development. The $983 million global software and consulting company provides reservoir simulation software to solve complex subsurface and surface challenges for the “new energy” industry.
At $12.03 per share, CMG is up 20.1% year-to-date and outperforms the tech (+16.93%) and energy (+14.62) sectors, including the TSX (+18.44%). Prospective investors can earn in two ways: price appreciation and dividend income. The current dividend yield is a modest 1.7%.
Its CMOST-AI leverages cutting-edge statistical analysis, machine learning (ML), and impartial data interpretation to pinpoint the optimal reservoir and operations solution. The CMG 4.0 strategy uses an automated optimization workflow to empower organizations to make more informed decisions, improve chances of success and increase profitability.
Besides supporting critical field development decisions for upstream planning, Computer Modelling wants to assist industry players in their energy transition strategies.
Exco Technologies operates in the auto parts industry and serves the auto/transportation sector and various end markets such as building and construction, electrical, and machinery and equipment. The $331.8 million company provides die-cast and extrusion tooling globally. At $8.59 per share (+13.53% year-to-date), XTC pays an attractive 4.9% dividend.
After three quarters in fiscal 2024 (nine months ending June 30, 2024), sales and net income increased 5.05% and 28.2% year-over-year respectively to $482.3 million and $21.9 million. Notably, free cash flow (FCF) rose 35.8% to $32 million from a year ago. Management notes the significant progress in innovation because of Exco’s use of AI and ML.
Exco maintains a positive outlook due to stable consumer demand for automotive vehicles in most markets. The company expects to achieve its annual revenue and EBITDA targets of approximately $750 million ($642.5 million run rate in fiscal 2024) and $120 million by fiscal 2026. At $8.59 per share (+13.5% year-to-date), XTC pays an attractive 4.9% dividend.
Coveo Solutions underperforms in 2024, but explosive growth is on the horizon. The $551 million company boasts an AI-powered intelligent search and recommendation technology platform. At $5.65 per share, this AI stock is down 41.15% year-to-date, a deep discount.
In Q1 fiscal 2025 (three months ended June 30, 2024), total revenue grew 6% to US$32.2 million while the net loss improved 12.9% to US$6.1 million. Also, the 200% year-over-year increase in cash flow from operating activities to US$3 million represents positive cash flows in four of five quarters.
Coveo’s strategic partnership with Salesforce is the latest growth catalyst, if not a game-changer. This integration with the American cloud-based software company will help large enterprises deal with complex data sources.
Canadians don’t have to cross the border to invest in AI stocks. Computer Modelling Group, Exco Technologies, and Coveo Solutions benefit from the AI wave and are well-positioned for massive growth. More importantly, the share prices are relatively cheaper.
The post 3 Artificial Intelligence (AI) Stocks to Buy With $1,000 and Hold for Decades appeared first on The Motley Fool Canada.
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Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Exco Technologies. The Motley Fool recommends Computer Modelling Group, Nvidia, and Salesforce. The Motley Fool has a disclosure policy.
2024
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