Laurentian Bank On the Diversified Technology sector, Laurentian analyst Nick Agostino said the pandemic has created a number of supply chain challenges and headwinds, with many of the IT companies he follows having spoken about product delays. As such, the analyst continues to recommend Kinaxis and TECSYS from the supply chain software side as standing to benefit while mdf Commerce and Descartes are also to be noted within the space.
As for IT companies, Agostino said there’s likely to be increased spending by businesses on IT in 2022 and into 2023 as some pent-up demand which has been deferred should make for above-normal growth in the IT space.
“That said, we note the strong underlying demand is being witnessed by IT providers Converge Technology (55 per cent YTD growth including M&A despite deferred sales), Softchoice (7 per cent organic growth YTD), Alithya (28 per cent LTM growth, 15 per cent organic),” Agostino wrote.
“The heightened IT (software) spending should also benefit our preferred pick, Sylogist, as well as 5N Plus, specifically in the semi-conductor materials market to supports sectors such as renewable energy, medical imaging, aerospace, security, sensing and telecommunications. We also note conglomerate Calian saw their technology-centric unit IT grow 42 per cent YoY (7 per cent organic) and Advanced Technology grow 9 per cent,” he said.