Haywood Securities analyst Pardeep Sangha is sticking to his guns in 2018, choosing the same top picks he did in the fourth quarter of 2017.
In a research report to clients today, Sangha revealed his top picks for the first quarter of the new year.
Following a 2017 that saw his overall coverage list performance return 19.5 per cent, the analyst is choosing two stocks that are more than familiar to those who follow his research; Nanotech Security (TSXV:NTS) and AcuityAds (TSXV:AT).
Sangha says he is choosing Nanotech because the fundamentals of the company are improving, pointing to recent Q4 results that saw the company grow its revenue by 126 per cent. He notes the company has a strong balance sheet, with $10.9-million in cash and zero debt.
Sangha is forecasting 120 per cent revenue growth for Nanotech in 2018 and an additional 114 per cent topline growth in fiscal 2019. The analyst has a “Buy” rating and a one-year price target of $2.25 on Nanotech Security, a price that implied a return of 61 per cent over Wednesday’s closing price of $1.40.
Sangha’s other top pick for the first quarter of 2018 had a tough go of things in the latter half of 2017.
In September, shares of AcuityAds tumbled after the company announced that due to cutting some self-serve customers in Europe, Middle East and Africa, losing a significant customer of recent acquisition 140 proof, and foreign exchange pressures would impact its 2017 topline significantly. Shares of AcuityAds tumbled as investors digested the news and have yet to recover.
But Sangha says investors should ignore the noise.
“We believe markets have over-reacted and the decline in Acuity’s share price represents a buying opportunity for investors,” the analyst says. The company continues to experience exceptional growth, has successfully integrated its past two acquisitions (Visible Measures and 140Proof), is increasing its Self Serve revenue, and is expanding geographically into Europe.
Sangha says he expects AcuityAds will post 51 per cent revenue growth in 2017 and 30 per cent topline growth the following year.
The analyst has a “Buy” rating and a one-year price target of $4.25 on AcuityAds, implying a return of 191 per cent over Wednesday’s closing price of $1.46.