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Tough market? Buy these stocks, analysts say

Brown eye

Brown eyeAmid all the news of tech layoffs, something happened: the stocks started to rip.

Axios writer Scott Rosenberg noted the disparity between the cloud of bad news hanging over the markets and the actual performance of the markets themselves.

“The bottom line,” said Rosenberg, is that “Some discouraging reports continue — including sagging ad growth and unsold Teslas — but tech’s leaders are beginning to see a turnaround. We’ll know they’re really feeling good when they start hiring in droves again.”

At Cantech Letter, we track the stocks that analysts think are your best bets in Canada. (You can sign up for free alerts on them here)

Let’s see what they’re saying now about three such stocks.

Fans of Calian Group (Calian Group Stock Quote, Charts, News, Analysts, Financials TSX:CGY) can expect more sparks to fly this year, according to Amr Ezzat, analyst for Echelon Capital Markets, who sees Calian’s M&A engine still gunning over 2023.

Ezzat says he sees better days ahead for Ottawa-based Calian, which offers training and engineering services primarily to the defense sector. The analyst maintained a “Buy” rating on the stock and $90.00 target price, implying a one-year projected return of 39.8 per cent.

Over at ATB Capital Markets, analyst Martin Toner is staying bullish on Toronto-based, software-as-a-service company Docebo (Docebo Stock Quote, Charts, News, Analysts, Financials TSX:DCBO)

Up almost 22 per cent over the Q1 was Docebo, which has been proving the use case for its learning management system and showing how profitability is becoming a reality, according to Toner.

Last week, Toner met virtually with members of Docebo’s management team and came away from the meetings touting DCBO’s growth prospects.

“Turning profitable in Q3/22 ahead of investor expectations, management has noted their expectation of exiting FY2023 with low-double-digit adjusted EBITDA margin. The external use case, enterprise customers, and growth with existing customers are all growth drivers for Docebo. As most of the Company’s ARR is under three-year contracts, the sticky revenue suggests Docebo would be resilient in a potential recession,” Toner wrote.

Finally, iA Capital Markets recently initiated coverage of Sabio Holdings (Sabio Holdings Stock Quote, Charts, News, Analysts, Financials TSXV:SBIO), starting the stock off with a “Buy” rating and 12-month target price of C$2.90 per share, which at press time was good for a projected return of 195.9 per cent. iA analyst Neehal Upadhyaya said SBIO is trading well below its peer group despite a better growth profile and positive EBITDA.

Sabio is a tech provider for the advertising-supported Video on Demand (VOD) and streaming industry with three subsidiaries. The company’s App Science platform provides privacy compliant, non-cookie, cross-screen household data from 55 million validated homes and 110 million connected TV (CTV) devices for insights on consumer behaviour.

Upadhyaya said the still growing trend to cord-cutting of traditional TV-watching in favour of VOD has shifted the advertising landscape.

“With the shifting audience and the inherent lack of data driven targeting, brands are following eye-balls and shifting their advertising budgets to VOD platforms as they allow for greater return on advertising spend (RoAS) through analytically guided marketing campaigns,” Upadhyaya wrote.

Disclosure: Sabio is an annual sponsor of Cantech Letter

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About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.
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