His Q3 picks didn’t hit it out of the park like his Q1 picks did, but Haywood analyst Pardeep Sangha is sticking to his guns with his fourth quarter picks, which he revealed today in a note to clients.
Sangha points out that the sharp and recent fall of one stock in particular laid waste to what would have been a stellar Q3 for his coverage universe.
“Our top picks last quarter did not perform well, but our coverage list overall still generated a positive return of 3.2% in Q3,” the analyst explains. “Our top performer in Q3 was VersaPay (VPY-V, Hold, $2.00 target) with a share price increase of 34.8% in the quarter, followed by Nanotech Security with a share price increase of 27.0%, and Avigilon (AVO-T, Buy, $25.50 target) which increased 24.3% in the quarter. Our worst performer in Q3CY17 was AcuityAds (AT-V, Buy, $4.25 target), which was also unfortunately one of our top picks for the quarter. AcuityAds’ share price declined 49.5% in Q3 due to the Company unexpectedly lowering its annual revenue guidance.”
But now that AcuityAds is effectively on sale, Sangha says investors should stick with the name. The analyst today named it one of his two Top Picks, the other being Vancouver-based security firm Nanotech Security. The analyst says he expects the company to achieve some key customer milestones before the end of the year. He is projecting revenue growth of 72 per cent in fiscal 2017 followed by 128% growth in 2018.
We have chosen Nanotech Security (NTS-V, Buy, $2.25 target) as our top pick for Q4CY17,” he says. “Nanotech is expecting to ship OTF product to a large Asian issuing authority in late calendar 2017, and the Company is expecting to make an announcement regarding the tax stamp opportunity in India before the end of CY17.
And with AcuityAds at less than half its March peak, Sangha says investors should take advantage of a downside overreaction. Following the news that AcuityAds cut its revenue expectations, the analyst cut his target on the stock from $7.00 to $4.25, but that target is now nearly double the current price.
“Despite having a poor Q3, we have chosen AcuityAds as our second top pick for Q4CY17 because we believe markets have over-reacted to the Company’s lowered revenue guidance. We believe the decline in Acuity’s share price represents a buying opportunity for investors as the Company continues to experience exceptional growth, has successfully integrated its past two acquisitions, is increasing its Self-Serve revenue, and is expanding geographically.”