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Post by
pointofreturnon Feb 01, 2012 12:46pm
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Post# 19474611
The Canuck Tech Discount Exists!
The Canuck Tech Discount Exists!Technology Sector
The Canuck Tech Discount Exists!
- There's been some discussion in the press recently about Canadian tech names being undervalued, and that this explains at least in part the M&A activity in the sector. We thought we'd look to see if Canadian tech names are indeed undervalued in general.
- We did a comparison of Canadian and U.S. mid cap ($75 million - $1.5 billion in cap) tech names using Bloomberg under the following criteria:
- On average, Canadian tech companies are valued at a 23% discount to their U.S. peers in the Software sector and a 34% discount in the Hardware sector, while having higher EBIT Margins and EPS Growth in both sectors.
- We note that the Hardware names seem to offer a steeper P/E discount than the Software names. This may explain why several of the recent acquisitions in Canada have been hardware names - RuggedCom, Gennum and Zarlink.
- Investment Theme: M&A will continue, and a basket of Canadian tech stocks should benefit from one or more takeouts.
Byron Berry, MA, CFA
Analyst/Strategist
Tom Astle, P.Eng, CFA
Head of Research
Technology & Cleantech Analyst
For a full version of this report, please click on the link below:
Technology Sector - The Canuck Tech Discount Exists!
The above is just my opinion, govern yourself accordingly.
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