Analysts from Paradigm Capital yesterday revealed their top picks for the third quarter of 2017 and once again the innovation sectors were strongly represented.
The list of eighteen stocks includes three from the TSX Tech sector and four others the firm describes as “growth” stocks.
A new addition to the list for the upcoming quarter is Firan Technology Group (TSX:FTG). Analyst Daniel Kim, who currently has a “Buy” rating and one-year price target of $5.75 on Firan, says the wind is at the Toronto-based company’s back.
“FTG is enjoying growth on multiple fronts: organic growth has resumed with rising airframe volumes; new cross-selling opportunities and new partnerships with key defence contractors; Chinese joint venture may surprise to the upside with current robust growth in new business; Boeing recently raised its 20-year forecast for single-aisle aircraft 5% and near-term production rates are expected to rise by 10%,” the analyst says.”FTG trades at a discount to its peers at 5.7x 2018e EV/EBITDA, versus PCB peers at 7.4x and Aerospace peers at 10.7x. We note we see potential for significant upside with new program wins, and at full capacity we see upside potential to $7.50/sh.”
A holdover from previous top pick lists is Shopify (TSX, NYSE:SHOP), a stock that has become a perennial favourite of analyst Kevin Krishnaratne, who currently has a “Buy” rating and a one-year price target of (U.S.) $100.00 on the stock.
“Shopify is in the very early stages of disrupting retail, with ~400K customers on its platform, revenue growing ~75%, gross profits up ~80% and subscriber gains at ~50%. Trends should continue to benefit from recent initiatives such as Shipping, International Payments, and new channel launches,” says Krishnaratne. “Our view is that estimates are very conservative, with multiple ways for Shopify to beat and raise guidance. In turn, our current US$100.00 target, which is based on 10.0x 2018e EV/Sales, likely also has room for upward revisions on the back of earnings events and new product releases.”
The most junior company to make Paradigm’s top pick list is Siyata Mobile (TSXV:SIM). Daniel Kim has a “Buy” rating and one-year price target of $0.85 on it.
“To date, Siyata has secured every carrier in Israel and Canada and has started device approval with a tier 1 U.S. carrier. We expect revenue to double this year and next. All current growth is based on old 3G products but the potential upside comes from the new 4G products for commercial vehicles and AT&T’s FirstNet contract,” says Kim. “In the next 60–90 days, the company will announce it has started device approval with a tier 1 U.S. carrier which we believe is the single biggest catalyst for the stock. This deal could potentially imply an incremental $100M in revenue, generating $20–$25M in EBITDA. Using our 12x EBITDA multiple this would imply a share price of $2.20–$2.75.”
Disclosure: Siyata Mobile is an annual client of Cantech Letter.