Constellation Software Inc. (CSU.TO)

The valuation is always high, that's the problem (88x trailing PE, 50x forward). CSU needs a lot of acquisitions, but it has rewarded shareholders. He prefers Open Text of CGI.

Usually in technical analysis you buy the breakout, especially when the chart shows a staircase pattern. Rally, consolidation, rally, consolidation, and so on. Some people say wait for a retest, which is about $4400. Risk is that it doesn't retest and just keeps on going. It becomes a bit of a coin toss.

Technically, there's a very significant technical breakout underway. Highly ranked on an RSI basis.

Now in an uptrend. Tends to make a new high, pull back to the trendline, and repeat. Previous rallies each lasted a few months. This rally is just getting started, and he'd think you're going to get a little more upside before you get the pause that refreshes. Unless you're into super-short-term trading, stay with this until it ends.

How do you know when it ends? When it breaks the last low and takes out the 200-day MA. Doesn't look as though that will happen for a while.

Upward trend goes all the way back to 2013. Very strong stock. Adding at these prices seems daunting, but it is breaking to new highs (a good thing) and could consolidate (come back a bit). Lots of consolidation since July around $4400. No indicator of a turnaround, so you can continue adding.

To add to a current position, plenty of support around $4400. For a new buyer, taking a position now wouldn't be the end of the world. If you're looking to start reducing, it has to drop below $4200.

One of very few growth stories in Canada. Huge success over the years. Trades at over 50x earnings. If you look at the chart between 2022-2023, the stock drew down in the neighbourhood of 20%. Challenge is that if we go through difficult market conditions, the high-multiple stocks correct more.

For years and years, has missed growth, revenue, and earnings numbers. Overcrowded. Fully priced. You could buy on pullbacks, but it could easily correct 25% in a matter of weeks or months.

There is an uptrend in place along with tests of the trendline. You could buy at the beginning of up bounces but don't buy in the troughs.

Last year was phenomenal. This year a little slower, but that doesn't change the thesis for him. Still believes it has ability to grow topline and bottom line close to 20% a year. If true, in 3-4 years you'll get another double. No end to the acquisitions it can make, as well as spinoffs to encourage faster growth. Don't get too miffed about the quarter-to-quarter acquisition growth.

Excellent, well run. She prefers more balance between organic growth and M&A, and this one grows by acquisition. No opinion on whether stock will split. 

Lots of chop the last little while. Specialized, mission-critical software through acquisition of companies with above-average growth, consistent profitability, and outstanding management. Lots of free cashflow. Yield is 0.1%.

His choice in the space. Has spun out many of its investments. Very successful acquisition strategy.

Revenue and cashflow numbers are good. One of Canada's few strong, well-managed technology companies. Small dividend, but the growth is on the capital side.

Great company and competitive advantage. But does the investor have a competitive advantage of knowing something that the market doesn't? Otherwise, it's already priced in. For CSU, the answer is absolutely not. Without that investor advantage, you're just throwing $$ against a wall hoping something will stick.

Don't sell it. Has the top management team in Canada. The invented the vertical software consolidation business. They can continue to deploy capital at high rates of return. Strongly buy on pullbacks. They have never split their stock. Have high insider ownership. Can grow a lot for years to come.

Excellent company. Safe bet is to buy on pullback, but stock appears to always grow up. Would recommend buying and holding for the long term. Ability to generate revenue growth, and expand margins very strong. 

Has executed incredibly well--they know how to buy and grow software companies that need help to grow. Valuation has always been high, though.