Ten Tech Stocks for your portfolio

We’re now a couple of months into 2023 and the results have been fair for technology stocks. 2022 was just plain awful, so anything different was going to look better, and after a bang-up January, the month of February has been a little hit and miss, as inflation continues to make investors cagey about further interest rate hikes.

With their focus pinned on the rest of 2023 ahead, ATB Capital Markets delivered its Growth & Innovation report on Sunday, with analyst Martin Toner arguing that a prime issue for many companies will be management guidance for the year ahead and whether or not it matches with analysts’ consensus projections.

In support of his case, Toner looked at the results from eighteen software companies who have already reported fourth quarter 2022 earnings and found a strong correlation between companies whose 2023 guidance beat the consensus call and positive performance by share prices immediately following the earnings release.

“We believe this provides proof that investors have priced in 2022 performance and if companies can at least guide in line with 2023 consensus numbers, it signals better-than-feared results,” Toner wrote.

On the tech stocks under ATB’s coverage, Toner noted quarterly results last week from Thinkific Labs (Thinkific Labs Stock Quote, Charts, News, Analysts, Financials TSX:THNC), where revenue increased by 27.8 per cent year-over-year and was in-line with consensus estimates. Management also forecasted that it would end 2023 with a profitable adjusted EBITDA run rate.

Toner said Thinkific is in the middle of a transition year and investors will be waiting to see what the company’s growth rate looks like over the next phase of its development.

“We believe showing re-accelerating growth in paying customers and overall revenue while operating expenses are declining is a positive sign. It reinforces that the Company’s growth is based on innovation rather than sales and marketing expenditures alone,” Toner wrote.

In other news, Kinaxis (Kinaxis Stock Quote, Charts, News, Analysts, Financials TSX:KXS) will be reporting its fourth quarter earnings on Wednesday, with Toner noting that management has raised its guidance for three quarters in a row. The analyst is forecasting Q4/22 revenue at $97.6 million and adjusted EIBTDA at $9.6 million.

“While we are comfortable than Kinaxis can maintain strong momentum in its top line, guiding well below consensus on adjusted EBITDA for 2023 could be a short-term headwind for the shares,” he said.

Below are ten companies from ATB’s Growth & Innovation coverage, listed in alphabetical order. All projected returns are as of the February 26 publication date of ATB’s report.

Stock: Blackline Safety (Blackline Safety Stock Quote, Charts, News, Analysts, Financials TSX:BLN)

ATB Capital rating: Outperform

ATB target price: $3.50

Projected 12-month return: 41.7 per cent

Stock: Docebo (Docebo Stock Quote, Charts, News, Analysts, Financials TSX:DCBO)

ATB Capital rating: Outperform

ATB target price: $90.00

Projected 12-month return: 91.6 per cent

Stock: E Automotive (E Automotive Stock Quote, Charts, News, Analysts, Financials TSX:EINC)

ATB Capital rating: Outperform

ATB target price: $12.50

Projected 12-month return: 237.8 per cent