The Investing News Network had the opportunity to speak with Aaron Dunn of Keystone Financial at the Extraordinary Future conference in Vancouver, where he discussed opportunities in the cybersecurity sector.
Cybersecurity is one of the fastest growing markets thanks to the increasing shift to digitalization — at least according to Keystone Financial experts.
At the recently held Extraordinary Future conference in Vancouver, the Investing News Network (INN) spoke with Aaron Dunn, senior analyst at Keystone Financial, where he explained that cybersecurity is a major opportunity for investors.
Keystone did a complete overview of the cybersecurity sector in May of this year, which Dunn said several companies in that space in the US have been generating “excellent profitability.”
“There’s a lot of talk these days on [artificial intelligence] AI, big data, [and] cloud computing,” Dunn said. “Basically, the digitalisation of the world. More data online and more automation, [and] with that comes the risk of cyber [threats].”
Keystone then recommended Fortinet (NASDAQ:FTNT) as its cybersecurity pick from the 58 stocks in the sector that it considered. Dunn said that the stock has since grown 45 percent in value since Keystone’s recommendation.
Further, Dunn explained that the firm looks for companies which can generate strong returns for shareholders.
“People have to remember that investing is a marathon and not a sprint,” Dunn explained. “When you’re dealing with speculative sectors,..returns can be erased very quickly and turned into loses.”
According to Dunn, Keystone Financial sets its eyes on individual companies that generate strong profitability, grow its revenues and cash flows and offer products and services to a growing market.
“A lot of these exciting verticals like cybersecurity, machine learning and AI clearly … have strong markets. They have brilliant futures,” Dunn said. “The trick for us…is not to point at the obvious but to actually find individual companies within those spaces that are going to generate strong returns for shareholders.”
Dunn cautioned that a lot of companies in these areas do not produce revenue or profitability and that there is a lot of speculation.
“[Keystone Financial] … would just exclude those companies immediately,” Dunn said. “We are looking for solid growing businesses that are profitable and that we believe are going to continue to increase their profitability going forward.”
In addition to INN’s interview with Dunn, Keystone also presented at the Extraordinary Future Conference done by its founder, Ryan Irvine. In the presentation, the firm recommended four stocks in different areas of technology for investor consideration.
Keystone’s picks included: Sylogist (TSX:SYZ), Viemed Healthcare (TSX:VMD), Xpel Technologies (TSX:DAP.U) and Questor Technology (TSXV:QST). Irvine highlighted several reasons for these picks, but noted key reasons like a “strong balance sheet” and “low relative valuations” remained consistent among the recommended companies.
Keystone in a slide mentioned that Sylogist is traded at a “significant discount” and that the fair value estimate of the company was C$16 based on justified price-to-earnings, along with C$1.30 per share in net cash. At the time of Keystone’s presentation on September 19, shares of the company were trading at C$12.65.
By Monday (October 1), Sylogist closed the trading session at C$13.50 and has gained 33.93 percent year-to-date. Meanwhile, shares of Viemed Healthcare, which graduated to TSX in May and has increased 42.83 percent since its launch, closed the trading session at C$6.60. Shares of Xpel Technologies, which has gained 392.86 percent over a year-to-date period, closed the trading session at C$6.90. However, Questor Technology has lost 15.93 percent year-to-date closed the session at C$2.27.
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Securities Disclosure: I, Bala Yogesh, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in contributed article. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.