In the event you’ve studied the Canadian inventory market in any respect, then it is best to have stumbled upon Constellation Software program (TSX:CSU). Listed on the TSX60, this is likely one of the largest and most vital corporations in Canada. Nonetheless, if it’s someway managed to fly underneath the radar, then it’s essential to know that Constellation Software program is an enormous tech conglomerate.

This firm has made a reputation for itself by turning into a serial acquirer of vertical market software program (VMS) companies. Since its founding within the mid-Nineteen Nineties, Constellation Software program has acquired a whole lot of VMS companies. This inventory has grown an incredible quantity since its founding and its preliminary public providing (IPO). With that stated, some buyers assume its greatest days are behind it.

On this article, I’ll focus on whether or not Constellation Software program inventory is a purchase in March 2023.

Why ought to buyers be concerned about Constellation Software program?

As I discussed earlier, Constellation Software program has grown tremendously over the previous twenty years. This progress has been mirrored in its inventory worth through the years. In Could 2006, Constellation Software program inventory was valued as little as $18.30. Immediately, one share of Constellation Software program inventory would price an investor a whopping $2,339.14. That represents a compound annual progress price (CAGR) of greater than 34%. That significantly outpaces the expansion of the broader market.

Nonetheless, with that large progress in thoughts, buyers could fear in regards to the regulation of huge numbers. That’s an idea the place corporations are unable to keep up excessive progress charges as they improve in dimension. Taking a look at Constellation Software program inventory’s efficiency over the previous 5 years, buyers can see that it has grown at a CAGR of solely 21% over that interval. This implies that the regulation of huge numbers could, in truth, be affecting Constellation Software program inventory.

Nonetheless, with such a powerful progress price for a corporation of this dimension, the excessive potential payoff for comparably low threat must be very interesting.

As well as, Constellation Software program’s founder, Mark Leonard, continues to guide the corporate as its president. For my part, so long as Mr. Leonard stays on the head of this firm, then Constellation Software program is a simple alternative for any investor right now.

Current modifications to this firm

Similar to some other enterprise, it’s crucial that Constellation Software program continues to hunt methods to remain forward of its competitors. For many of its historical past, this firm has targeted on buying small- and medium-sized VMS companies. Nonetheless, in 2021, Constellation Software program introduced that it might lastly begin concentrating on massive VMS companies for acquisition.

After all, that might result in difficulties within the quick time period. Nonetheless, if Constellation Software program’s confirmed something over its practically three-decade-long existence, is that the corporate has methods of getting what it needs. Constellation Software program has demonstrated its eagerness to amass bigger companies when its subsidiary, Lumine, set forth the course of to take over WideOrbit, an American media enterprise.

That WideOrbit acquisition deserves a complete article by itself, however buyers ought to know that the transaction required Constellation Software program to spin out Lumine as its personal entity with a purpose to full that transaction. The rationale for that being, Constellation Software program can use shares in Lumine group to assist pay for the transaction with out having to do a full money deal.

Silly takeaway

Constellation Software program is an enormous tech conglomerate that Canadian buyers must be conversant in. This firm has an extended historical past of success and is dedicated to sustaining its place on the prime of its business. With its founder persevering with to guide Constellation Software program by means of new endeavours, I consider this can be a inventory that might repay in the long term. Constellation Software program inventory is actually price a purchase in March 2023, for my part.