2014 might remembered as a pause year in the nascent sector rotation from mining and metals to the innovation sectors here in Canada.
Many expected at least one of Canada’s privco royalty, namely Hootsuite, Desire2Learn, Shopify, Vision Critical or BuildDirect would be public already, injecting new life into the scene. But it was not to be.
Canada did get new technology listings in 2014, but most were in the small to mid-cap range, and many went public through CPCs and RTOs, an increasingly common way to list.
Meanwhile, amongst those already listed, the rich got richer. Many of the top ten performers this year are household names to those who have more than a passing interest in Canadian tech stocks. They are led by Amaya Inc., which executed one of the most aggressive acquisitions in the recent history of the markets, acquiring the company that owned the PokerStars and Full Tilt Poker brands this past summer.
We count down the ten best performing stocks listed in the TSX Technology Index. As there were new listings, we placed a minimum trading period of six months in order for a stock to qualify for this list.
1. Amaya Inc. (TSX:AYA)
Price on December 31st, 2013: $7.95
Price on December 5th, 2014: $36.85
Percentage Change: +363.5%
It’s hard to imagine a more transformative acquisition than the one Amaya made in July, acquiring Oldford Group Ltd., the parent company of Rational Group Ltd., the world’s largest poker business and owner and operator of the PokerStars and Full Tilt Poker, for a whopping $4.9-billion. The deal instantly turned Amaya into the world’s largest publicly traded online gaming company.
2. Intertain Group (TSX:IT) (began trading Feb. 18)
Price on February 18th, 2014: $4.05
Price on December 5th, 2014: $16.10
Percentage Change: +297.5%
Keeping it in the family, Intertain Group is a spinoff of Amaya Gaming. The company, which began trading in February, wasted no time in finding its way to the top of tech performers. In mid-November, Mackie Research Capital analyst Nikhil Thadani raised his target on the stock. “Intertain’s revenue guarantee, strong organic prospects, able management team, very rapid M&A execution and very likely additional M&A upside warrants a premium multiple, in our view,” he explained.
3. Firan Technology Group (TSX:FTG)
Price on December 31st, 2013: $.30
Price on December 5th, 2014: $.66
Percentage Change: 120%
Founded in 1983, Toronto-based Firan supplies aerospace and defense electronic products, specializing in quick turn around production runs. The company’s clients include Bombardier, Rockwell Collins and Bell Helicopter. After its recent third quarter results showed 11% top line growth, CEO Brad Bourne was feeling bullish. “FTG’s momentum has continued in Q3 2014 with strong results across the Corporation, particularly at our Circuits business and the two new Aerospace facilities in Tianjin and Chatsworth where we continued to see progress on qualification activities, strong orders and increased shipments”, he said.
4. Espial Group: (TSX:ESP)
Price on December 31st, 2013: $.75
Price on December 5th, 2014: $1.55
Percentage Change: 107%
Espial has stumbled of late, falling from summer highs of more than three dollars, but the stock’s performance is strong enough to earn the four-spot on this list. In October, Haywood analyst Massimo Voci maintained his “Buy” rating on the stock. “We believe the company is well positioned to grow considerably in the coming years as Pay TV operators responds to increasing competitive pressures and Smart TVs proliferate globally,” said Voci, adding: “Espial is particularly well positioned to capitalize on the these trends to the early adoption of Comcast Corp’s RDK and expertise with HTML5″.
5. Sierra Wireless (TSX:SW)
Price on December 31st, 2013: $25.69
Price on December 5th, 2014: $47.74
Percentage Change: +85.8%
Sierra Wireless’s first year as a M2M pure-play was simply stellar. It was, in fact, so impressive that one noted analyst changed his mind about the company’s prospects. Cormark analyst Richard Tse said Sierra Wireless was one of his favourite names of 2013, but explained that after a strong run in the stock he downgraded it to a “Hold” rating in January. That, said the analyst, was a mistake. Tse says he didn’t take into account the potential for the company’s operating leverage to grow considerably. In a update to clients in early November, Tse said acquisitions and accelerating revenue has the potential to make shares of Sierra Wireless go higher. “Way higher”, he said.
6. Vecima Networks (TSX:VCM)
Price on December 31st, 2013: $5.15
Price on December 5th, 2014: $9.00
Percentage Change: +74.7%
Shares of Victoria based broadband equipment supplier Vecima Networks have been rising since late 2011, but 2014 was something else. Investors got on board with the company’s story big time this year, presumably appreciating the company’s often unscheduled habit of delivering cash back to them.
7. BlackBerry (TSX:BB)
Price on December 31st, 2013: $7.90
Price on December 5th, 2014: $12.21
Percentage Change: +54.5%
Turns out, fixer John Chen’s autopsy of the BlackBerry corpse revealed that the patient was still breathing. Cormark analyst Richard Tse says Chen’s execution is making the company’s brand meaningful again, especially in enterprise. The analyst says BlackBerry’s “new” subscription-based revenue model has the potential to drive revenue in a way that is greater than one employing traditional system access fees. In a mid-November research update in which he upgraded BlackBerry to a “Buy”, Tse said the days of the market pricing in a risk that the device maker might go under could be in the past. “…we now believe there’s developing going-concern thesis based on a credible road map and momentum for BES12,” said Tse. “Obviously, that will not happen overnight but as far as the stock is concerned, we believe the market is looking to price in a 2-3 year outlook on the name”.
8. Constellation Software: (TSX:CSU)
Price on December 31st, 2013: $224.99
Price on December 5th, 2014: $345.30
Percentage Change: +53.5%
It seems the camera-shy Constellation Software simply goes up and up, but the company seems to find a way to fill in value behind its soaring price. Global Maxfin Capital analyst Ralph Garcea notes that despite a meteoric rise in share price, Constellation Software is still cheaper than its industry comparables. In a research report to clients in early November, Garcea said better than expected margin leverage and an active pipeline of M&A opportunities caused him to raise his target on the stock, this time to $370.
9. Tucows (TSX:TC)
Price on December 31st, 2013: $13.41
Price on December 5th, 2014: $20
Percentage Change: +49.1%
Tucows whose name is an acronym for The Ultimate Collection of Winsock Software, is now into domain registration, and is the third largest ICANN-accredited registrar in the world. In mid-November, Tucows, which is also listed in the U.S., reported third quarter earnings of $0.24, two cents better than the street consensus of $0.22. The company’s topline of #38.9-million also bested the street.
10. Open Text (TSX:OTC)
Price on December 31st, 2013: $48.86
Price on December 5th, 2014: $68
Percentage Change: +39.2%
NUmbers were a little off on SWIR, never hit 47, only 42 🙂
Closed Friday at $47.74 on the TSX, $41.82 on the Nasdaq…
Leave a Reply
You must be logged in to post a comment.