Three top tech picks for Q1 2023

Echelon Capital Markets analyst Rob Goff is sticking with his guns on a trio of tech stock picks for the year ahead. Goff delivered reports on Tuesday on Converge Technology Solutions (Converge Technology Solutions Stock Quote, Charts, News, Analysts, Financials TSX:CTS), Playmaker Capital (Playmaker Capital Stock Quote, Charts, News, Analysts, Financials TSXV:PMKR) and Quisitive Technology Solutions (Quisitive Technology Solutions Stock Quote, Charts, News, Analysts, Financials TSXV:QUIS), all of which are returning as Top Picks for Goff for the first quarter of the new year.

Goff said he was disappointed to see the share price drop by 30 per cent for Converge, an IT solutions provider, over the Q4 2022 despite the company’s announcement that it was undergoing a strategic review following expressed third-party interest and also coming during a period where Converge’s US and European peers were up 11.3 per cent and flat at 0.9 per cent, respectively.

Goff thinks the market is overlooking the strength of Converge’s growing scale and expertise in high-growth verticals and he remains optimistic that strong demand and a backlog drawdown will support double-digit organic growth going forward.

“While near-term performance will shift with updates and speculation around the strategic review, we view CTS as an attractive stock with building fundamental momentum together with an impeccable performance track record against its copy/paste/accrete/repeat formula,” Goff wrote.

On digital sports media company Playmaker, Goff said Playmaker is coming off a catalyst-rich fourth quarter which included the $31.2-million acquisition of affiliate marketer Wedge Traffic along with the playing of the World Cup. All told, PMKR’s share price went up 29.7 per cent over the quarter. 

But Goff sees more upside to come as the company continues to execute and deliver on revenue synergies with Wedge while taking advantage of new regional online sports betting launches in the US and additional acquisitions, which the analyst said are more likely to come over the second half of the year.

“The key US regional online sports betting openings should provide a tailwind for Playmaker; in particular, Wedge tends to benefit from US online sports betting launches, helping to set the stage for a potentially strong Q123 for the property,” Goff wrote.

Finally, on Microsoft cloud solutions provider Quisitive, Goff said he’s returning QUIS to his Top Pick Portfolio even as the stock delivered an impressive 48 per cent over the fourth quarter 2022. Goff expects sustained organic revenue growth from Quisitive to exceed expectations and be supported by strong tailwinds and emerging contributions from its payment processing platform PayiQ at the end of the year.  

“We look for the commercialization of PayiQ to focus investor attention on the potentially redefining upside the platform offers QUIS shareholders. For IT Services, we look for further contracts to facilitate QUIS gaining scale and leverage. We continue to look for positive read-throughs from cloud providers indicating strength in cloud demand,” he said.

Stock: Converge Technology Solutions

Echelon rating: Speculative Buy

Echelon target price: $10.00

Projected 12-month return: 118 per cent

Stock: Playmaker Capital

Echelon rating: Speculative Buy

Echelon target price: $1.20

Projected 12-month return: 150 per cent

Stock: Quisitive Technology Solutions

Echelon rating: Speculative Buy

Echelon target price: $1.65

Projected 12-month return: 114 per cent