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Cantech Letter adds Stock #19 to Model Portfolio

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Today we provide a long overdue update to the Cantech Letter Model Portfolio, both in content and in the way we report its performance to you. Our Model Portfolio, for those new to Cantech Letter, is a collection of Canadian technology stocks that rank exceptionally highly in our own Quant Snapshots feature. You’ve seen Quant Snapshots dotted throughout the site. They rank companies in five key metrics; price to sales, cash to market cap, debt to market cap, three year growth and enterprise value to sales.

The Cantech Letter Model Portfolio began on September 26th, 2008 and, as it turned out, made a rather inauspicious debut. Our first entry, Intrinysc Software (TSX:ICS) has hovered anywhere between a 50% and 75% loss. Fortunately, a few highlights have redeemed our belief in value and in technology. We added Aastra Technologies (TSX:AAH) to the portfolio on November 24th, 2008 at $8.75. We then removed it months later, June 4, 2009 when it hit $30.58, locking in a +242% for the Model Portfolio. Another stock, Matrikon (TSX:MTK) was sold to Honeywell in 2009 for $4.50, representing a 114% gain over the price we added it to our list, $2.10.

As mentioned previous, we make two changes today. One is to add our nineteenth company, revealed below. The second is to present the performance of the Cantech Letter Model Portfolio in terms of an annualized return. Before we move forward, this is probably a good time to bring attention to the disclaimer at the bottom of the page. Cantech Letter’s Model Portfolio is supplied for information purposes only, and that this information should not be construed as investment advice and is not intended to solicit the buying or selling of any stocks mentioned. Please read the full disclaimer below.

Now, about the average annualized return. As of January 7th, 2011, Average Annual Return of Cantech Letter Model Portfolio stands at 14.3%.

How did we get there? The Cantech Letter Model Portfolio is now in Year Three. Year One began September 26th, 2008 and ended September 25th, 2009 and included fifteen stocks. The year was highlighted by the performance of Aastra Technologies, and was up 31.9% as worldwide markets rallied back after the financial crisis that began in the autumn of 2008. 2009 was a tougher year. The portfolio now included seventeen stocks, but finished down 10.6%.

Now in Year Three of the Cantech Letter Model Portfolio things are back on the upswing. The current gain of the index sits at 21.6% Year to Date.

Before we present the latest addition to the Cantech Letter Model Portfolio, let’s break down the performance of the components in Year Three to date. This update covers the performance of the sixteen stocks in the index from September 24th, 2010 to January 7th, 2011.

THE CANTECH LETTER MODEL PORTFOLIO
Year Three Performance

1. Intrinysc Software (TSX:ICS) Original Profile date: September 26, 2008. Price at profile date: $0.20. Price at September 24th, 2010: $.05 Price at January 7th, 2011: $0.08
Year Three Gain/Loss: +60%

2. Carmanah Technologies (TSX:CMH) Original Profile date: October 6, 2008 Price at profile date: $0.20. Price at September 24th, 2010: $.75 Price at January 7th, 2011: $0.62
Year Three Gain/Loss: -17.3%

3. Versatile Systems (TSXV:VV) Original Profile date: October 19th, 2008. Price at profile date: $0.11. Price at September 24th, 2010: $.085 Price at January 7th, 2011: $ .07
Year Three Gain/Loss -17.6%

4. Jemtec (TSXV:JTC) Original Profile date: October 15th, 2008. Price at profile date: $0.81 Price at September 24th, 2010: $.74 Price at January 7th, 2011: $ .78
Year Three Gain/Loss +5.4%

5. Tecsys (TSX:TCS) Original Profile date: October 27th, 2008. Price at profile date: $$1.20. Price at September 24th, 2010: $1.88 Price at January 7th, 2011: $1.84
Year Three Gain/Loss -2.1%

6. Sierra Wireless (TSX:SW) Original Profile date: November 10th, 2008. Price at profile date: $9.50 Price at September 24th, 2010: $10.59 Price at January 7th, 2011: $14.53
Year Three Gain/Loss +37.2%

7. Chartwell Technologies (TSX:CWH): Original Profile date: November 17th, 2008 Price at profile date: $1.55 Price at September 24th, 2010: $.75 Price at January 7th, 2011: $.85
Year Three Gain/Loss +13.3%

8. Serenic Corp (TSXV:SER) Original Profile date: December 1st, 2008 Price at profile date: $$0.245 Price at September 24th, 2010: $.40 Price at January 7th, 2011: $.36
Year Three Gain/Loss -10%

9. Glentel Inc (TSX:GLN) Original Profile date: January 5, 2009 Price at profile date: $8.75 Price at September 24th, 2010: $19.41 Price at January 7th, 2011: $26.40
Year Three Gain/Loss +36%

10. Miranda Technologies (TSX:MT) Original Profile date: January 19, 2009 Price at profile date: $6.99 Price at September 24th, 2010: $4.76 Price at January 7th, 2011: $5.80
Year Three Gain/Loss +21.8%

11. RDM Corp (TSX:RC) Original Profile date: February 2, 2009 Price at profile date: $0.75 Price at September 24th, 2010: $.92 Price at January 7th, 2011: $1.10
Year Three Gain/Loss +19.6%

12. Hemisphere GPS (TSX:HEM) Original Profile date: May 8, 2009 Price at profile date: $1.22 Price at September 24th, 2010: $.74 Price at January 7th, 2011: $1.50
Year Three Gain/Loss +102.7%

13. International Datacasting (TSX:IDC) Original Profile date: August 28, 2009 Price at profile date: $0.265 Price at September 24th, 2010: $.0.285 Price at January 7th, 2011: $.43
Year Three Gain/Loss +50.8%

14. Biorem (TSX:BRM) Original Profile date: February 4th, 2010 Price at profile date: $0.68.Price at September 24th, 2010: $0.48 Price at January 7th, 2011: $.495
Year Three Gain/Loss +3.1%

15. International Road Dynamics (TSX:IRD) Original Profile date: February 26th, 2010 Price at profile date: $.87 Price at September 24th, 2010: $0.63 Price at January 7th, 2011: $.84
Year Three Gain/Loss +33.3%

16. Cyberplex (TSX:CX) Original Profile date: July 16, 2010 Price at profile date: $.63 Price at September 24th, 2010: $0.46 Price at January 7th, 2011: $.50
Year Three Gain/Loss +8.7%

Average Gain/Loss to Date (September 24th, 2010-January 7th, 2011): +21.6%

Today, we add a seventeenth stock to The Cantech Letter Model Portfolio. Account for the removals of Aastra and Matrikon from the mix and Sangoma Technologies becomes the nineteenth member of the list.

The Markham, Ontario head office of Sangoma Technologies.

Quant Snapshot: Sangoma Technologies (TSXV:STC)

Founded in 1984, Markham, Ontario’s Sangoma manufactures hardware and software for Wide Area Networks. The company makes an array of hardware and software products including their most recent entry, NetBorder Call Analyzer. NetBorder automates the real-time classification of outbound calls to improve the performance of corporate contact centres. While the company characterized the top line of their most recent quarter (Q1, 2011) as disappointing, they still delivered a profit, which is typical for Sangoma. We break down the numbers in an updated Quant Snapshot.

1. Price to sales: 1.27 x Sales

As of September 30th, 2010 (Q1, 2011) Sangoma had 30.34 million shares outstanding.The price as of January 14th, 2011 was $.50 This gives The Company a market capitalization of $15.17 million. In the trailing four quarters, sales totaled $11.9 million.

2. Cash to Market Cap: 50.2%

As of September 30th, 2010, Sangoma’s reported cash and short term investments was $7.61 million. The Company’s Market Cap, as of January 14th, 2011 was $15.17 million.

3. Debt to market Cap: 0.004%

As of September 30th, 2010 Sangoma reported $70,000 in Long Term Debt.

4. Trailing Three year growth rate: 17.6%

Sangoma’s sales were $8.22 million in fiscal 2007. Sales grew to $12.51 million in fiscal 2010.

5. Enterprise Value to Sales: .64 x Sales

Enterprise Value as of September 30th, 2010 is $7.63 million, based on a market cap of $15.17 million plus long term debt of $70,000, minus cash and short term investments of of $7.61 million. Sales for the trailing four quarters totaled $11.9 million.

All financial information about Sangoma is gleaned from
their filings with the System for Electronic Document Analysis and
Retrieval (SEDAR)
All calculations are based on The Company’s closing share price as of
close January 14th, 2011: $.50
Sales from trailing four quarters: $11.9 million
Cash and short term investments as of September 30, 2010 (Q1, 2011): $7.61 million
Shares outstanding: 30.34 million.

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About The Author /

Nick Waddell
Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.

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