“The TSX is lacking a number of our preferred industries including information technology and industrials, which again has us looking to the U.S. to better round out our portfolios,” wrote Macquarie Private Wealth in its Global Market Outlook for the third quarter of 2013.
But in a recent report on technology stocks, Vancouver-based investment firm PI Financial took a different view, noting that the Canadian tech sector has been a strong performer in the last 12 months, with standout companies including Critical Control Solutions Corp. (
TSX: T.CCZ,
Stock Forum) and DragonWave Inc. (
TSX: T.DWI,
Stock Forum) and Avigilon Corp. (
TSX: T.AVO,
Stock Forum).
Here are some of the companies featured in a Canadian technology monthly research report by PI analysts Pardeep Sangha and Neil Bakshi.
Avigilon Corp. (
TSX: T.AVO,
Stock Forum). A designer of surveillance sytems, Avigilon is one of the fastest-growing companies in Canada, PI says. Its growth is driven by the accelerating shift away from analog to high definition camera surveillance systems. The company recently announced the acquisition of RedCloud Security Inc., a privately-owned company, with a web-based appliance platform that integrates with customers’ IT systems.
PI has a buy rating with a target of $21. The stock traded this week at $18.01, leaving a market cap of $705 million, based on 39.1 million shares outstanding.
Descartes Systems Group Inc. (
TSX: T.DSG,
Stock Forum). The company provides logistics, via hosted software, for transportation companies, logistics providers, manufacturers, distributors and retailers. Descartes operates the largest cloud-based logistics network in the world, processing over 5 billion messages per year.
It recently acquired KSD Software for US$33 million, a company which shares some of Descartes’ customers and is expected to contribute $10 million in annual incurring revenue.
PI has a buy rating with a target of US$12.25. The stock traded this week at $11.88, leaving a market cap of $745 million, based on 62.7 million shares outstanding.
Ag-Junction Inc. (
TSX: T.AJX,
Stock Forum) is based in Hiawatha, Kansas. It designs, develops and manufactures hardware and software applications for the global precision agriculture section. The company recently changed its name to Ag-Junction to reflect its singular focus on the precision Agriculture market.
As part of its restructuring, Hemisphere has now transitioned all of its manufacturing from Calgary to an external manufacturing partner. PI says it believes the company stands to benefit in the long term from an increasing global population and a shortage of arable land.
PI has a buy rating with a target of $1. The stock traded this week at 98 cents, leaving a market cap of $68 million, based on 69.2 million shares outstanding.
Solium Capital Inc. (
TSX: T.SUM,
Stock Forum) is a Calgary-based global provider of stock plan administration technology services, helping companies automate and manager their stock option and purchase plans. PI says the company is already established in Canada with a 75% market share among TSX-100 companies and is rapidly increasing its presence in the U.S. through acquisitions. It is also active in the U.K. and Australia.
PI has a buy rating with a target of $5.75. The stock traded this week at $5.80, leaving a market cap of $248.3 million, based on 42.8 million shares outstanding.