2019 was another good year for Canadian tech stocks, something that could be said since about 2012. No, the sector hasn’t had the blinding gains in a single 365 day period that cannabis has had, but neither has it experienced a crushing fall from grace. The S&P/TSX Info Tech Index has gained more than 65% this year, adding about $58 billion (US$45 billion) in value
By our count, 34 of the 53 names in the TSX Tech Index were gainers, a number that extends to 36 if you add mid-year listees Lightspeed POS and Docebo.
To the list, with one caveat. We have excluded all names under ten cents and whose market cap is less than $10-million.
1. Real Matters (Real Matters Stock Quote, Chart, News TSX:REAL)
Market Cap: $1.0 billion
Closing Price on December 31, 2018: $3.30
Closing Price on December 31, 2019: $12.32
Percentage Change: +273%
The best-performing tech stock and top overall return for TSX-listed companies is Markham, Ontario’s Real Matters, a network services provider for the mortgage lending and insurance industries. REAL saw its US Appraisal and Title businesses soar in 2019, boosting the company’s top and bottom lines.
And there’s likely more where that came from, as Real’s penetration into the United States is still small, at 10.6 per cent market share for Appraisal and just one per cent for Titles.
Commenting in November on the company’s fiscal 2019 (ended September 30), where its US Appraisal and Title segments grew their revenues by 14.1 and 126.7 per cent, respectively, CEO Jason Smith said, “Overall, we were very pleased with how the business performed in fiscal 2019. Given our current market share and the relationships we have with our clients, we believe we have a very solid foundation from which to grow in fiscal 2020 and beyond.”
2. Shopify (Shopify Stock Quote, Chart, News TSX:SHOP)
Market Cap: $65 billion
Closing Price on December 31, 2018: $188.79
Closing Price on December 31, 2019: $516.30
Percentage Change: +173%
If investors weren’t already aware of Canadian tech darling Shopify they certainly got schooled in 2019 as the e-commerce sensation shot out of the gate and never looked back. And whereas in previous years SHOP had to contend with well-publicized short-seller attacks and a cagey market that regularly dropped the stock on any hint of slowing growth on the quarter, Shopify seemed to hit its stride in 2019.
Gone were worries that the company’s business model and merchants relied too heavily on platforms like Facebook to sell their goods, a concern which was replaced by cheers that Shopify might have the mojo to someday rival the mighty Amazon.
At $65 billion in market capitalization, Shopify is now bigger than Canadian blue chips like BMO, CIBC and BCE, and despite the nose-bleed valuation, with revenue growth expected to stay about 30 per cent even as the company continues to scale up business and build out its fulfillment network, how can you not root for SHOP?
3. TECSYS ( TECSYS Stock Quote, Chart, News TSX:TCS)
Market Cap: $281 million
Closing Price on December 31, 2018: $12.36
Closing Price on December 31, 2019: $32.37
Percentage Change: +162%
Supply chain management company Tecsys saw its revenues grow in 2019 through a successful transition to SaaS licensing along with strong growth in its cloud business and the company continues to see bookings and pipeline expansion across its healthcare and complex retail distribution verticals.
Tecsys looks to have a long runway ahead of it, too. Calling the stock one of his Best Ideas for 2020, Stifel GMP analyst Deepak Kaushal says the company is approaching an inflection point with the move to cloud and SaaS delivery and its crossing of the $100-million mark in revenue.
“In our view, this will enable continuous organic innovation, segment and geographic expansion, acquisitions, and operating leverage. For investors, we believe this will deliver sustainable growth, margin expansion and potential for valuation multiple expansion to a level comparable with other high-growth SaaS stocks,” wrote Kaushal in a January 7 research note.
4. Firan Technology Group (Firan Technology Group Stock Quote, Chart, News TSX:FTG)
Market Cap: $96 million
Closing Price on December 31, 2018: $2.11
Closing Price on December 31, 2019: $4.07
Percentage Change: +93%
Firan Technology had been sinking for a couple of years before turning things around in 2019. The circuits, defence electronics and aerospace company made some key acquisitions in 2018 and the pace of business has increased with the continued rollout of 5G networks worldwide, making way for a brilliant 2019. Even a major cyberattack on Firan during the fall couldn’t break the stock’s stride as it cruised to almost a double and could be heading back to its record highs set in early 2017.
5. Ceridian HCM Holding (Ceridian HCM Holding Stock Quote, Chart, News TSX, NYSE:CDAY)
Market Cap: $13 billion
Closing Price on December 31, 2018: $47.05
Closing Price on December 31, 2019: $88.09
Percentage Change: +87%
Human resources software company Ceridian made the most of its first full year of trading, climbing 39 per cent over November and December alone and is already up seven per cent for 2020. The dual-listed company made a splash in April 2018 with an IPO that raised US$560 million, putting the company’s worth at US$3 billion, the most for a TSX-listed IPO.
But Ceridian is no newcomer. With almost 30 years on the books and its tried and tested Dayforce platform now raking in new customers — Dayforce had 33-per-cent recurring revenue growth in its last reported quarter — Ceridian management still sees strong market demand going into 2020.
6. Pivot Technology Solutions (Pivot Technology Solutions Stock Quote, Chart, News TSX:PTG)
Market Cap: $69 million
Closing Price on December 31, 2018: $1.00
Closing Price on December 31, 2019: $1.68
Percentage Change: +68%
After a poor year in 2018, IT services company Pivot Technology saw a steady rise in share price over 2019 as it worked to integrate a number of subsidiary businesses and generate cost efficiencies. The year was punctuated by a sale and partnership agreement with Intel for Pivot’s Smart Edge platform. Calling the deal value creative for Pivot, Echelon Wealth analyst Gianluca Tucci said there’s plenty of upside available to PTG and in an October research note raised his 12-month target to $3.30.
“Pivot continues to deliver robust Adj. EBITDA & cash-flow at a more value-add revenue base with a focus on higher profitability of each revenue dollar,” Tucci wrote.
7. Altus Group (Altus Group Stock Quote, Chart, News TSX:AIF)
Market Cap: $1.6 billion
Closing Price on December 31, 2018: $23.67
Closing Price on December 31, 2019: $37.86
Percentage Change: +60%
Last year saw real estate software company Altus post its best results of the 2010s, a decade in which the stock gained 217 per cent in total. Altus’ 2019 showed solid growth from the company’s commercial real estate consulting and analytics segments, together propelling top line revenues up 13.6 per cent in its latest quarter.
The stock may have had its day, however. In a November update to clients, National Bank analyst Richard Tse downgraded AIF to “Sector Perform,” saying while growth opportunities remain for the company, near-term expectations are already factored into its valuation.
8. Descartes Systems (Descartes Systems Stock Quote, Chart, News TSX:DSG)
Market Cap: $5.0 billion
Closing Price on December 31, 2018: $36.03
Closing Price on December 31, 2019: $55.50
Percentage Change: +54%
2019 was another great year for transportation and logistics software company Descartes Systems, which aside from a flat 2018 posted strong returns over the past half-dozen years. One of the oldest tech names in Canada, Waterloo, Ontario’s Descartes is a solid growth-by-acquisition story with 22 purchases in the past five years alone and growing by a CAGR of eight per cent. Descartes’ strong free cash flow continues to put it in the top shelf of more defensive plays in Canadian tech.
9. EXFO (EXFO Stock Quote, Chart, News TSX:EXF)
Market Cap: $313 million
Closing Price on December 31, 2018: $3.92
Closing Price on December 31, 2019: $6.00
Percentage Change: +53%
Network analytics company EXFO ended 2018 on a down note but picked it up in 2019, thanks to a successful restructuring, a major purchase in mobile analytics company Astellia and double-digit increases in bookings.
The stock took a hit last week on more modest numbers in EXFO’s fiscal first quarter 2020 but management remains upbeat on its ability to gain market share in the 5G space, with CEO Philippe Morin saying, “Although we are operating within a highly dynamic and transforming industry, we are confident about achieving our profitable growth strategy for the full fiscal year.”
10. Kinaxis (Kinaxis Stock Quote, Chart, News TSX:KXS)
Market Cap: $ 2.8 billion
Closing Price on December 31, 2018: $65.90
Closing Price on December 31, 2019: $100.02
Percentage Change: +52%
Kinaxis was trundling along with only mediocre gains in 2019 until the company posted a huge third quarter in early November, with management raising its guidance for the ensuing quarter. The cloud-based supply chain management is making headway in both Europe and Asia and announced in 2019 a number of big time customer wins from the automotive and pharma sectors. That plus a new slate of products is helping to keep the optimism flowing into 2020.
The Stars Group (TSX:TSGI): +50%
Enghouse Systems (TSX:ENGH): +45%
Constellation Software (TSX:CSU): +44%