With enough racetrack behind us to separate some of the better horses in the field (Monday was the 101st day of the year) we decided to take a closer look at the current leaders in the Canadian tech comeback, circa 2015.
The S&P Technology Index has continued to climb aggressively this year and while many who follow Canadian tech stocks are waiting for names like Hootsuite, Shopify, Vision Critical and Desire2Learn to join them, new listings are trickling in the form of reverse mergers and capital pools.
The theme of a flight to quality continues in Canadian tech, many of the names below are among the top TSX stocks overall and are more mature companies more than a little experienced at putting cash to the bottom line.
We rank the top ten performing stocks listed on the TSX Technology Index from the last day of 2014 until the close of the market on Monday, April 13. We omitted any stocks that began the year at ten cents or less.
1. Espial (TSX:ESP) +132.7%
Price on December 31, 2014: $1.71
Price on April 13, 2015 $3.98
North American cable operators facing steep customer declines will drive growth for Espial, says Global Maxfin Capital analyst Manish Grigo. Pointing out that U.S. cable operators have lost more than four million subscribers, or ten percent of their base, over the past three years, Grigo says these increasingly desperate incumbents will turn to Espial to battle over-the-top services like Amazon, Netflix and Hulu.
2. Firan Technology (TSX:FTG) +122.4%
Price on December 31, 2014: $0.85
Price on April 13, 2015: $1.89
Shares of Firan Technology rose sharply in early February after the company reported Q4 results that were cheered by the street. Firan earned $1.18-million on revenue of $16.49-million in its fourth quarter, a significant beat over fiscal 2013’s earnings of $197,000 on a topline of $15.42-million. The quarter helped the company turn an annual loss of six cents a share in 2013 into earnings of eleven cents in 2014. Management said an improvement in gross margins could be attributed in part to cost-saving initiatives and the weakening of the Canadian dollar.
3. Kinaxis (TSX:KXS) +47.8%
Price on December 31, 2014: $18.50
Price on April 13, 2015: $27.34
Kinaxis has nearly doubled since its IPO, but the stock still has big upside, said Cormark analyst Richard Tse in late February.
“In our opinion, despite the big move in the stock price (+84% since its IPO), we believe there’s meaningful upside from here given our outlook,” said Tse. “Interestingly, we think that outlook could be conservative in the face of the Company’s investment into products, sales, and a growing partner channel. In our opinion, the Q4 results and conference call backed up that thinking”.
4. Urthecast (TSX:UR) +41.5%
Price on December 31, 2014: $1.59
Price on April 13, 2015: $2.25
An early entry into the fledgling Earth Observation market, Vancouver-based Urthcast aims to deliver a near realtime stream of Earth in Ultra-HD through cameras placed on the International Space Station. The company expects to target defense and government agencies, but also broader commercial markets such as the news media, agriculture and environmental monitoring. Last week the company entered into a bought deal financing with Canaccord and Clarus Securities.
5. Constellation Software (TSX:CSU) +41.3%
Price on December 31, 2014: $345.44
Price on April 13, 2015: $488.25
In early February, portfolio manager Jason Donville said Constellation Software would prove those who think the stock might end its meteoric rise this year wrong.
“My guess is that by the end of the year they will have beaten the current year’s estimates by a good ten to fifteen per cent,” said Donville, who noted that the analyst consensus on Constellation is was a “Hold”.
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6. International Road Dynamics (TSX:IRD) +35.1%
Price on December 31, 2014: $0.74
Price on April 13, 2015: $1.00
On Monday, IRD continued its growth with its Q1. 2015 results, which saw improvements in revenue and, especially, in gross margin, which rose to 30.6%.
“Following solid growth and improved profitability in fiscal 2014, progress continued in the first quarter of fiscal 2015 with higher revenues and a strengthening gross margin,” said CEO Terry Bergan. “Looking ahead, we believe the current environment of lower oil prices could positively impact our business due to increased use of highway and transportation infrastructure, while continued investment by governments and the private sector to facilitate economic growth, improve transportation systems efficiency, reduce emissions, and increase safety and productivity should drive further gains over the long term.”
7. Norsat (TSX:NII) +35%
Price on December 31, 2014: $5.00
Price on April 13, 2015: $6.75
In January, Richmond B.C. based Norsat made the decision to pursue a listing on NYSE MKT market, and underwent a ten-for-one share consolidation as part of the exchange’s minimum trading price requirement.
CEO Amiee Chan explained the reasoning behind the decision. “Norsat has made considerable progress over the last number of years to transition the company to a leadership position within the highly specialized communications marketplace in which we operate,” she said. “We continue to stay at the forefront of product innovation, and have effectively supplemented our internal growth with strategic acquisitions which has led to consistent profitability over the last 8 years. A listing on the NYSE MKT will enhance our visibility, particularly in the United States, where more than half of our revenues are derived from. We are excited about this next stage of development for Norsat as we believe a listing on the NYSE MKT is a key component to enhance shareholder value going forward.”
8. Enghouse Systems (TSX:ESL) +33%
Price on December 31, 2014: $41.49
Price on April 13, 2015: $55.16
Enghouse Systems’s remarkable run has been powered by acquisitions, often international in scope and executed at what prove to be bargain basement prices. Early the company pulled another page from that playbook. Enghouse announced it has acquired Danish mobile billing provider CDRator A/S for just over one times sales. The Markham-based company said it would pay $23-million for a concern that posted more than $20-million in revenue in fiscal 2014.
9. CGI Group (TSX:GIB.B) +29.4%
Price on December 31, 2014: $44.29
Price on April 13, 2015: $57.31
Shares of CGI Group picked up in late February, as rumours of a takeout of Virginia-based IT player Computer Sciences Corporation swirled. Cormark analyst Richard Tse said that while CSC acquisition might make sense, he believed CGI Group would make another acquisition in the next twelve months, regardless. He cited the success of the company’s pickup of U.K.-based Logica, which he said was tracking ahead of expectations.
10. Catamaran (TSX:CCT) +25.1%
Price on December 31, 2014: $60.12
Price on April 13, 2015: $75.18
A late March press release signaled the end of an era. Catamaran and UnitedHealth Group announced that Catamaran and OptumRx, UnitedHealth’s free-standing pharmacy care services business, had agreed to merge for a consideration of $12.8-billion. It was a heady finale for the company from Milton, Ontario that began as a reverse merger and grew to nearly $22-billion in revenue.