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Toronto’s 10 Largest Tech Stocks

Waterloo gets all the action and Ottawa gets a lot of the credit, but underneath the hustle and bustle that is now, based on employment, North America’s the third largest financial services center after New York and Chicago, Toronto has tech too.

And not only does Toronto boast names that have been around since the days of Sittler and Salming, like Valeant Pharmaceuticals (TSX:VRX) (formerly Biovail) and Celestica (TSX:CLS), the list of up an comers in the GTA, led by innovators such as Redknee (TSX:RKN), TransGaming (TSXV:TNG) and Route 1 (TSXV:ROI), is growing. The following survey counts down the ten largest Canadian listed technology stocks whose head office is located in the Greater Toronto Area, ranked in terms of market cap, as of September 27th, 2011.

1. Valeant Pharmaceuticals (TSX:VRX)
Toronto, $12.26 billion

This works only if you count life sciences as tech, which in this case we do. The acquisition of the business (and name) of Valeant instantly made Biovail Canada’s largest publicly traded drug manufacturer. The newly created entity got its financial house in order late last year with a billion dollar splash into the debt market. Valeant immediately looked around for acquisitions, settling on Dermik, a dermatology unit of Sanofi for $425 million after its $5.7 bid was rebuffed by the board of US based drug developer Cephalon. Then, in July, it acquired a dermatology unit from Johnson & Johnson for $345 million. The company recently set it sites on Afexa Life Sciences (TSX:FXA) maker of the popular Cold-FX flu remedy. Valeant posted a profitable Q1 and Q2 that were more than double the same six month period in 2010, a number that “demonstrated the strength of our diversified business model,” according to Valeant CEO J. Michael Pearson.

2. Celestica (TSX:CLS)
Toronto, $1.69 billion

15% revenue growth. Improved earnings. A mountainous short position that continues to build. To shareholders of Celestica (TSX:CLS), it must sound like one of these things doesn’t belong. On July 22nd, the Toronto based contract manufacturer reported results from its Q2, 2011. The numbers showed a company that is returning to growth. The $1.83-billion Celestica did bested last year’s $1.59- billion, and the $.21 cents a share earnings was better than last year’s $.06 cents, too. So are there clouds on the horizon? Not according to the company. Celestica also guided higher for Q3. Management expects Q3 revenue to be in the range of $1,725-million to $1,875-million and adjusted net earnings per share to be in the range of 23 cents to 29 cents.

3. Constellation Software (TSX:CSU)
Toronto, $1.49 billion

Formed in 1995, Toronto’s Constellation Software, which makes software for the public and private sector, is clear about its strategy. The company grows through acquisition, looking to acquire best of breed companies across different verticals. Constellation is involved in various niches on the public and private side from software for housing authorities, transportation agencies, and software for large home builders. On the strength of this strategy, the company has grown its revenue from just $243 million in fiscal 2007, to nearly $634 million in fiscal 2010. In their recently reported Q2, Constellation earned $58.5 million.

4. Northland Power (TSX:NPI)
Toronto, $1.24 billion

Until the first day of this year, Toronto’s Northland Power wasn’t a stock at all, but an income fund. When it converted to a Canadian public corporation on January 1st of this year it became part of the TSX Cleantech Index, and one of Toronto’s largest tech stocks. Northlands’s solar, wind biomass and run-of-river projects concern, generate near a thousand megawatts of generating capacity, or enough to power all but the largest of cities in Canada. Most quarters see Northland wind up in the red, as it has nearly a billion dollars of construction projects underway.

Burlington's Ecosynthetix will, in all likelihood, be the largest tech-related IPO in Canada this year.
Burlington's Ecosynthetix will, in all likelihood, be the largest tech-related IPO in Canada this year.

5. Evertz (TSX:ET)
Burlington, $919 million

Evertz name derives from its founder, Dieter Evertz. He founded the eponymous company in 1966, before selling to a group that included current bosses Romolo Margarelli and Doug DeBruin, who came over from Leitch Technologies. The Company went public in 2006, raising $67 million in a TSX IPO. Evertz is a broadcasting infrastructure company. The Company product line includes timecode equipment, closed captioning technology and multiviewers. Evertz’s products have been used in the production of Star Wars III, Rocky 6, CSI, Oprah and the 2008 Olympics. Earlier this month, Evertz reported its numbers for the quarter July 31. The company’s revenues of $75.1-million, were a marginal increase over the $73.8-million the company posted a year earlier.

6. CML Healthcare (TSX:CLC)
Mississauga, $827 million

The public debate about strain on the healthcare system isn’t a new one. Toronto’s CML Healthcare has acted as a buffer to Canada’s medical community since 1971, performing outsourced MRI work CT scanning, ultrasounds, mammographys and x-rays. CML now has 106 medical imaging centres throughout Ontario, BC and Alberta. Fiscal 2010 was a bit of a backstep for CML, but the company is still growing rapidly; the $476 million topline it showed that year was a leap over $2007’s $312 million.

7. Capstone Infrastructure (TSX:CSE)
Toronto, $411 million

Capstone, which used to be know as Macquarie Power, is another Toronto cleantech contender. The company has cleantech interests in various parts of the world, including a heating business in Sweden. But Capstone clearly has a large footprint in Ontario where it, for one, operates the Erie Shores Wind Farm, a a sixty-six wind turbine farm in Port Burwell. Size wise, the company is up to nearly 400MG of power across their portfolio of interests.

8. Ecosynthetix (TSX:ECO)
Burlington $343

The new kid on the block. In early August, Burlington, Ontario based EcoSynthetix raised just over $100 million by selling 11.15 million shares at $9. The size and valuation of the IPO of the Burlington based company, which develops and markets sugar based macromers and polymers, is important enough to be a real shot in the arm to the entire Canadian IPO scene, says Wellington Financial’s Mark McQueen.

9. Enghouse (TSX:ESL)
Markham $238 million

Telecom solutions provider Enghouse has been around since 1984, but appears to now be hitting its stride. Markham based Enghouse provides software solutions for the most complex of call centers, managing customer interactions for banks, utilities and insurance companies. The Company has never been a market darling, but its bottom line performance have the stock at decade highs. The Company has grown its revenue from $55 million in fiscal 2007 to $94 million in 2010, and is extremely profitable; in the first quarter 2011 Enghouse earned $3.11-million on revenues of $28.6 million.

10. Gennum (TSX:GND)
Burlington, $237 million

Founded in 1973 as Linear Technology, Gennum is the back end that makes 3D TV happen. The company’s history is in semiconductor products for the video broadcast industry. Through acquisition and in house innovation Gennum has kept an aggressive stance with products that have kept it at the bleeding edge of broadcast technology. Many of Gennum’s products and services are complex, but the company’s mission boils down to making sure that the myriad of data communications it enables do not lose signal integrity. April’s acquisition of Nanotech Semiconductor for $30.1-million, meant a slight increase in topline sales for Q2, but earnings were a shade lower.

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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.

Comment

One thought on “Toronto’s 10 Largest Tech Stocks

  1. Finally Route1 gets a little attention. Not a big player yet, they could easily explode into a force in the data security segment…and that’s no small sector. Already with ongoing contracts and pilot projects with several US Government agencies through their Mobikey device. Financially speaking they are very close to break even (TTM) and boast a huge gross profit pct, routinely in the 90% range.

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