A Canadian FAANG?
The tech sector is a misunderstood niche of innovative ventures, often overlooked by investors who haven’t been able to dedicate the time to truly understand the unique issues each of these operations tackles.
Canada’s digital economy is rich in its own right. Looking ahead, the global landscape is on the verge of great change and tech will be at the forefront. How Canadian companies utilize their assets to either reap the rewards or pick up the scraps remains to be seen, but the next great stock could likely come out of nowhere. Here are some emerging tech companies whose efforts could make them valuable inclusions into any portfolio.
The US has its well known FAANG stocks (Facebook, Amazon, Apple, Netflix, Google) and Canada actually has its own tech league as well, known as - DOCKS.
An innovative tech hub in its own right, the five Canadian companies that make up DOCKS are:
Descartes Systems Group (TSX:DSG, NASDAQ: DSGX): A provider of software solutions for the transportation and logistics, distribution, manufacturing and retail industries. Its capabilities include route planning, route execution, telematics, cargo security compliance, document management services, logistics flow control, freight audit and settlement, dock scheduling and yard management, and connectivity services. DSG has operations across North and South America, as well as Europe.
Open Text (TSX & NASDAQ: OTEX): Even the most upkept email and document folders can get messy, which impacts efficiency. OTEX’s software provides clients the means to archive, aggregate, retrieve and search unstructured information, such as documents, e-mail and presentations.
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Constellation Software (TSX:CSU): A developer of customizable software for public- and private-sector markets, CSU acquires, manages, and builds vertical-specific businesses. Its operations are organized in two segments: Public Sector and Private Sector. The portfolio companies it serves includes various markets including: Communications, credit unions, beverage distribution, tour operators, auto clubs, textiles and apparel, hospitality and community care.
Kinaxis (TSX: KXS): Based out of the nation's capital, this company delivers software solutions for sales and operations planning (S&OP) as well as supply chain management. The firm's flagship RapidResponse product is offered on the cloud. Its capabilities include consequence evaluation and alerting, responsibility-based collaboration, high-speed analytics, and scenario simulation. Kinaxis's S&OP solution capabilities include supply and demand planning, capacity and inventory planning, and inventory management. KXS recently reimagined its supply chain ecosystems by expanding its planning platform:
(Image via Kinaxis. Click to enlarge.)
Shopify Inc. (TSX & NYSE: SHOP) : A household name and the leading multi-channel commerce platform. Merchants use Shopify to design, set up and manage their stores across multiple sales channels, including mobile, web, social media, marketplaces, brick-and-mortar locations, as well as pop-up shops. The platform also provides merchants with a powerful back-office and a single view of their business, from payments to shipping. The company recently announced that it had completed its acquisition of 6 River Systems, Inc., which adds a cloud-based software and fleet of collaborative mobile robots called Chuck to the Shopify Fulfillment Network, accelerating its growth.
South of the 49th:
Looking a bit deeper than FAANG’s canopy, there are a number of other tech businesses advancing their bottom line.
The Trade Desk Inc. (NASDAQ: TTD): A technology platform for ad buyers, it’s a self-service platform that allows clients to purchase and manage data-driven digital advertising campaigns using their own teams. The platform manages integrated advertising campaigns across various advertising formats, including display, video and social, on a multitude of devices, including computers, mobile devices and connected TV.
Okta Inc. (NASDAQ: OKTA) : A subscription-based service, the Okta Identity Cloud enables customers to secure their users and connect them to technology from any device. The platform is used by organizations in two ways: To manage and secure internal users, and to connect and secure their external users via application programming interface it has developed.
Square Inc. (NYSE: SQ): Offering payment acquiring services to merchants, along with related services. SQ recently launched Cash App, a person-to-person payment network. Stockhouse Editorial featured this company back in August, looking at how it signed an agreement with DoorDashto acquire all-in-one food ordering platform Caviarfor $410 million in cash and stock. This unison aims to combine the streamlined acceptance system of online and in-person orders for merchants between DoorDash and Square, long with Caviar’s portfolio of premium restaurants and leading technology. Square will release financial results for Q3 2019 on November 6th.
(Image via Square Inc.)
Alteryx Inc. (NYSE: AYX): A computer software company specializing in self-service data analytics software. Its platform enables organizations to improve business outcomes and the productivity of their analysts. Boasting solutions such as advanced analytics and location intelligence, the company's subscription-based platform allows organizations to prepare, blend and analyze data from a multitude of sources and more quickly benefit from data-driven decisions.
Eventbrite Inc. (NYSE: EB): This tech platform enables users to solve challenges associated with creating live experiences, like concerts or public speaking engagements. The company platform helps to plan, promote and produce live events, thereby allowing creators to reduce friction and costs, increase reach and drive ticket sales.
Snap Inc. (NYSE: SNAP) Technically a camera company, SNAP is home to one of the most popular social networking apps, Snapchat. The firm has approximately 158 million daily active users and generates nearly all of its revenue from advertising with 88% coming from the US. Much like Netflix and Amazon, SNAP is launching its own library of streaming programs, but this time, made-for-mobile created exclusively for Snapchat’s audience.
For something that does a bit more legwork, an ETF can also be a useful way to both gain exposure to “expensive” shares like Google or Amazon, coupled with some hidden treasures, without shelling out the actual cash for those shares.
Two tech-heavy ETFs worth checking out are:
Fidelity MSCI Information Technology Index (FTEC)
Global X FinTech Thematic (FINX)
These stocks should offer some guidance on where to start with due diligence into this massive ocean of a market. Do you actively invest into tech, or do you keep a cautious distance? Let us know your thoughts in the comments, or recommend a couple companies or ETFs you think are worth checking out.
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