Like a sneaky straight right hand punch that sends a fighter to the canvas, 2018’s early promise was quashed in the later rounds.
From October onward, it was hard to find a winner in any sector. There were many potential culprits, including a U.S. trade war with China, softening oil prices, and political uncertainty. But it seemed investors weren’t necessarily selling because of these things, they were selling and then pinning the reason for it on one of the above.
This was the leanest year since we have been tracking the year’s top performers on the TSX. In fact, our list was almost a DNF, because just eleven of the stocks listed on the exchange’s tech sector posted gains. Here they are, in order of the return they delivered.
1. TeraGo (TeraGo Stock Quote, Chart TSX:TGO)
Closing Price on December 29, 2017: $4.39
Closing Price on December 31, 2018: $10.68
Percentage Change: +143.3%
TeraGo Inc takes top honours for 2018 by a long shot, with the data centre and cloud infrastructure company doing well to stabilize its connectivity business and attract customers, something that has been reflected in its share price, which started its upward push just as 2017 was drawing to a close.
With its last quarterly report delivered on November 7, TeraGo managed a revenue increase of 2.4 per cent and a 13 per cent EBITDA increase, along with revealing a strong pipeline in its cloud and colocation and connectivity segments. But the ramp-up to 5G mobile infrastructure is the key event for TeraGo, which should be able to leverage its portfolio of spectrum licenses —including 2,120 MHz of spectrum across Canada’s six largest cities— while at the same time making itself a potentially valuable pickup for strategic buyers
2. AgJunction Inc. (AgJunction Stock Quote, Chart TSX:AJX)
Closing Price on December 29, 2017 (last trading day of the year): $0.51
Closing Price on December 31, 2018: $0.80
Percentage Change: +56.9%
Automated steering and precision agriculture company AgJunction took second place for 2018, as the micro-cap tech company saw its share price jump this past March when investors responded to news of a $55-million bulk purchase order along with strong quarterly revenue numbers. The stock has been trading more or less sideways ever since but AJX’s early gains were enough to keep it ahead of most of the pack.
3. Shopify Inc. (Shopify Stock Quote, Chart TSX, NYSE:SHOP)
Closing Price on December 29, 2017: $127.11
Closing Price on December 31, 2018: $188.79
Percentage Change: +48.5%
You can’t keep a good stock down! If you didn’t know already, owning Shopify is not for the faint of heart, what with its massive price swings, the short-seller attacks and all those baked-in forward earnings. But SHOP continues to impress with its revenue growth and with each quarter the company further solidifies its place within the expanding e-commerce economy.
4. CGI Group Inc. (CGI Group Stock Quote, Chart TSX:GIB.A, NYSE:GIB)
Closing Price on December 29, 2017: $68.30
Closing Price on December 31, 2018: $83.50
Percentage Change: +22.3%
Over the past decade, CGI Group’s growth has become legendary, and while 2018 definitely had its ups and downs, the IT consulting and systems integration company still came out ahead. There’s more upside going forward, says analyst Richard Tse of National Bank Financial, who last month put a 12-month target of $100.00 on GIB.A, stating, “We believe CGI is moving up the value chain with an increasing proportion of revenue from IP and digital (higher margin), organically built and acquired. We like CGI’s defensive (recurring cash flow and de-leveraging) attributes and the obvious optionality from M&A, particularly given a consistent record of execution.”
5. Constellation Software Inc. (Constellation Software Stock Quote, Chart TSX:CSU)
Closing Price on December 29, 2017: $762.02
Closing Price on December 31, 2018: $873.86
Percentage Change: +14.7%
Another impressive climber over the past half-decade, CSU got the wind knocked out of it in July as investors reacted to disappointing quarterly results. Essentially a growth-by-acquisition story, the stock has yet to recover and Constellation may be hard-pressed to repeat its past success going forward.
6. Absolute Software Corporation (Absolute Software Stock Quote, Chart TSX:ABT)
Closing Price on December 29, 2017: $6.88
Closing Price on December 31, 2018: $7.74
Percentage Change: +12.5%
Vancouver-based Absolute Software bucked the tech sector trend over the fall by climbing 17 per cent between early October and mid-November, backed by strong recurring revenue and impressive sales numbers. For its last reported quarter (ended September 30), the endpoint security and risk management company beat analysts’ estimates on both revenue and EBITDA.
7. Baylin Technologies (Baylin Technologies Stock Quote, Chart: TSX:BYL)
Closing Price on December 29, 2017: $3.44
Closing Price on December 31, 2018: $3.81
Percentage Change: +10.8%
Baylin kicked it up a notch over the last couple of months of 2017, jumping from the low $2.00 range to where it currently trades in the mid-$3.00s. The wireless technology management company is seeing top and bottom line growth, the latest coming in its last quarterly earnings in October where the company boasted Adjusted EBITDA growth of 129 per cent. Stephen Takacsy of Lester Asset Management says that Baylin has made a number of key acquisitions, positioning itself in practically all sectors of the wireless antennae space.
“We’re looking at a company that’s going to have huge growth potential for the next 20 years, especially when the 5G networks start rolling out in North America,” says Takacsy. “Meanwhile, their sales are booming overseas as developing countries catch up to North America. They’re also positioned for satellite bay stations.”
8. Solium Capital (Solium Capital Stock Quote, Chart TSX:SUM)
Closing Price on December 29, 2017: $10.91
Closing Price on December 31, 2018: $11.79
Percentage Change: +8.1%
Solium Capital is currently 14 per cent off its late-July high but the cloud-based SaaS company remains up for the year with steady top line growth and high recurring revenue base. Last month, analyst Pardeep Sangha of Haywood Securities gave SUM a 12-month target of $17.00, saying that the stock remains at a substantial discount to its peer group.
9. Enghouse Systems (Enghouse Stock Quote, Chart TSX:ENGH)
Closing Price on December 29, 2017: $61.43
Closing Price on December 31, 2018: $66.41
Percentage Change: +8.0%
Markham-based software company Enghouse is another acquisition-focused business which has managed to post a positive year-to-date, in this case based on the front half of 2018 where the stock grew 32 per cent between January and mid-July. The company’s quarterly report earlier this month was mixed, with revenue coming in below expectations while net income for the quarter beat analysts’ estimates.
10. CAE (CAE Stock Quote, Chart TSX, NYSE:CAE)
Closing Price on December 29, 2017: $23.45
Closing Price on December 31, 2018: $25.09
Percentage Change: +7.5%
Already a strong performer over the past two years, CAE had a couple of big announcements in November that helped the flight simulator and training company pull out of October’s tech sector nosedive: a quarterly report which featured double-digit earnings growth and notice that it would acquire Bombardier’s business aircraft training business for US$645 million.
Ceridian HCM Holding Inc. (Ceridian Stock Quote, Chart TSX, NYSE:CDAY)
Opening Price on April 26, 2018: $37.09
Closing Price on December 27, 2018: $47.08
Percentage Change: +26.9%
Human resources software company Ceridian made a splash in April when it raised US$462 million in its IPO, the largest ever for a tech company on the TSX. Like the rest of the sector, Ceridian has slipped over the last few months of 2018, but it still boasts impressive gains for the year.