Should I Buy Topicus (TOI.V)? Finance YouTuber Analysis

The YouTuber is buying Topicus, a smaller subsidiary spin-off of Constellation Software focused on European markets, due to its current undervaluation amidst the software sector sell-off. He believes Topicus can grow its free cash flow by 20% annually over the next 5 years, starting from a smaller base. A conservative DCF, assuming a 20x free cash flow multiple (below its historical 30x), projects a 23.5% compounded annual growth rate and a fair value of $161 Canadian, indicating significant upside.

“So while the market is so fearful towards software stocks right now, I am trying to buy what I think are the highest quality software stocks which are constellation software and to pickis and I have been continuing to nibble on them and add to them as their share prices have continued to fall because I think that they are unjustifiably low right now.” — ▶ 43:00

The YouTuber highly recommends Topicus, citing its high growth rates, shareholder-friendly approach (no stock-based compensation), and low AI disruptibility risk. He views it as a compelling investment, similar to Constellation Software, due to its strong business model and attractive valuation in the current market.

“Ultimately, I think that the most attractive business out of this entire group is Constellation Software. I think that it has a low AI disruptibility risk. The business is also one of the fastest growing in this entire group. It's trading for one of the lowest price multiples and I think that it is the most shareholder friendly by far by doing no dilution and stock-based compensation.” — ▶ 1:09:00