If anything is certain about the Canadian technology industry, it’s that it’s experiencing a year of massive growth in 2017. Paired with the federal government’s “innovation budget” announced in March 2017, there’s certainly no signs of it slowing down any time soon.
As a result, a number of Canadian tech stocks have performed well so far this year. Here, the Investing News Network (INN) profiles Canadian tech stocks to watch in Q4 of this year, with data provided by Haywood Securities’ Technology Top Picks–Q4CY17 Industry Report. While Nanotech Security (TSXV:NTS) and AcuityAds (TSXV:AT) are Haywood’s two top picks–which we will go into more detail below–there is certainly no shortage of companies in this list for investors to consider.
Read on to learn more about Haywood Securities’ top tech picks.
Based in Toronto, AcuityAds is Haywood’s second top stock pick, aims to enable marketers to connect with audiences through digital media. In particular, the company offers transparency on costs and brand safety, as well as real-time reporting and analytics. Of note, AcuityAds’ provides targeted digital media solutions that enables advertisers to connect with its audiences across a variety of platforms, including mobile, video and social display.
The Haywood Securities report states that AcuityAds had a “poor Q3” but included it as its second pick because it believes there has been an overreaction by the market to the company’s lowered revenue guidance. In terms of AcuityAds’ share price, Haywood Securities reduced its target price from $7 to $4.25 after Acuity lowered its 2017 revenue guidance, but still expects that the company will generate 52 percent in revenue growth in 2017 and 30 percent growth in 2018.
“We believe the decline in Acuity’s share price represents a buying opportunity for investors,” the research note states, adding that AcuityAds is still experiencing “exceptional growth.” Case in point, some of the company’s growth includes its announcement on October 2 that provides update on its recent acquisitions, 140 Proof and Visible Measures.
According to the company’s website, the definition of Avigilon is “to be perpetually alert and watchful.”
Avigilon designs, develops and manufactures video analytics. Based in Vancouver, the company’s software protects and looks over a number of locations, which includes stadiums, retail stores, casinos, healthcare centers, transit stations, airports and schools, among other things.
Haywood Securities states the company’s share price increased 24.3 percent in Q3 catapulted by strong results in August. According to the company’s press release, Avigilon’s revenue totaled $99.5 million in Q2 2017, compared to $85.8 million in Q2 2016. As a result, Haywood’s report states they continue to be bullish on Avigilon and have increased its target price to $25.50 in the quarter.
Cortex Business Solutions (TSXV:CBX)
For over 10 years, Cortex Business Solutions has worked in helping companies to connect and interact with each other to transmit documents and help grow their businesses.
Over that period of time, the company has developed a wide variety of technology partners to enhance its “customer investment in Procure to Pay software.”
Last quarter, shares of the company decreased 3.2 percent, according to Haywood Securities. Due to the recent flooding in Houston, Texas, the research firm states the company may see some short-term revenue impact, particularly as it relates to the oil and gas industry.
“However, we expect increased activity in 2018 from the infrastructure rebuild around Houston,” the report states.
On that note, because the company didn’t report any results for the quarter, Haywood Securities didn’t change its target price, which remains at $6.
Descartes Systems Group (TSXV:DSG)
Descartes Systems provides federated network and global logistics solutions. The company’s solutions include its Logistics Technology Platform, which melds the Descartes Global Logistics Network; customs and regulatory compliance; routing; mobile and telematics; global logistics network services, and so on.
Over the last quarter, Haywood Securities states it increased its target price for Descartes twice (from $25.50 to $28 as a result of it acquiring MacroPoint in mid-August and then to $29). That said, Haywood currently has a hold recommendation on the company due to its share price trading close to Haywood’s target price. As of market close on October 3, 2017, shares of Descartes were priced at $34.88.
Espial Group (TSX:ESP)
Espial Group was founded in 1997, and designs and markets software solutions to enable delivery of Internet protocol television. With that in mind, the company’s products allow service providers like cable television, satellite TV and other telecommunications providers to install Espial’s services to their customers.
In August, Espial Group reported its Q2 financial results, highlighting a 72 percent increase to $7.8 million from the same period in 2016. That said, Haywood Securities stated the results were “weaker than expected,” which lead to it decreasing its target price from $4.25 to $3.75.
Still–Haywood is relatively bullish on Espial Group as it will look to announce additional cable operator wins before the end of the year.
H2O Innovation (TSXV:HEO)
H2O Innovation is a provider of integrated technological water treatment solutions to municipal, energy and mining end users.
Last quarter, Haywood Securities bumped its target price for the company from $2 to $2.25 resulting from strong revenue growth for Q4. According H2O Innovation’s press release, its revenue increased to $82.8 million compared to $50.7 million from the previous fiscal year. Looking ahead, Haywood expects H2O’s delayed projects, which are now coming into play, will send its stock price rising.
Nanotech Security (TSXV:NTS)
Nanotech Security is Haywood Securities’ top pick to watch in Q4 2017. Nanotech is in the business of designing, manufacturing, and marketing nano-optic OVDS and OTF products. Given that these products have protection and enhancement applications across a wide range of markets, including banknotes, the company’s main focus is, in fact, on the banknote market.
According to Haywood’s report, Nanotech looks to ship its OTF product to “a large Asian issuing authority” late in the year together with an announcement about a tax stamp opportunity in India before the end of the year as well.
“We are bullish on Nanotech’s growth potential,” the Haywood Securities report reads. The report goes on to suggest that Haywood is forecasting a 72 percent revenue in growth for Nanotech’s fiscal 2017, and increasing to 128 percent growth in 2018. Similarly, Nanotech’s stock price rose 27 percent in Q3 2017, which led to Haywood increasing its target price from $2 to $2.25 for the quarter.
On that note, some of Nanotech’s big news last quarter include: its third quarter financial results, highlighting a 151 percent revenue increase compared to the same quarter the year prior; and being named one of the fasting growing companies in BC by Business Vancouver.
Solium Capital (TSX:SUM)
Solium Capital is a cloud-enabled service for global equity administration. With offices in Canada, the US, United Kingdom and Australia, the company has so far accumulated over 3,0000 clients.
In August, Solium released its Q2 2017 financial results, noting a revenue increase of 9 percent to $21.6 million. As a result, Solium’s share price increased by five percent, Haywood Securities notes and increased its target price from $10.75 to $11.50. In November of 2016, Solium announced it had entered into a definitive license agreement with Morgan Stanley. As per the Haywood Securities report, Solium Capital expects to migrate its first Stanley Morgan customer in Q4 2017.
VersaPay is a payment processing and payment system with two offices in Canada–Toronto and Montreal–and one in New York. While the company is primarily a Canadian payment processing service, it does provide its electronic transaction processing service in the US as well.
In August, VersaPay announced its Q2 financial results, noting a 77 percent revenue increase to $0.63 million compared to $0.36 million in Q2 2016. Prior to that the company announced it had entered into an agreement with the Royal Bank (TSX:RY). With those two announcements, shares of VersaPay increased 34.8 percent, according to Haywood Securities, which led the research outlet to bump its target price from $1.60 to $2. That said, Haywood states it currently has a hold recommendation on the company because its share price is already close to its target price.
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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.