Kneat is a top pick, Reza Samahin says

Investors should be taking a look at a little-known smallcap called Kneat (Kneat Stock Quote, Chart, News, Analysts, Financials TSX:KSI).

So says Reza Samahin, portfolio manager at K.J. Harrison & Partners. The investor appeared on BNN Bloomberg’s “Market Call” March 20th to talk about his best ideas.

“Kneat is a very interesting company,” the fund manager said. “it’s rare to find a high-quality company with good management in Canada that’s a small cap. Kneat fits that bill. It’s a high-growth company -it grew ARR last quarter by 60%, which is very impressive.

Samahin says the stock is not exactly cheap, but is growth at a reasonable price.

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“Its valuation, while it may seem high by Canadian standards, it isn’t when you compare it to U.S. peers that are growing at the same rate, at about seven or eight times ARR.”

Samahin says that in the time that he has been following the company, it has delivered on its promises.

“It’s targeting regulated industries where you need a validation solution. They started out with the pharmaceutical industry. Of the top ten pharmaceutical companies, Kneat has the majority of those customers, which is highly impressive for a smallcap company,” he said. “They delivered on what they said they would deliver over the years and the stock has responded, but I think there is till quite a bit to go. They are selling to new customers as well as their current install base and that’s a very good sign. We really like the metrics, we like management, we like the market, we like the customer base and we thinks it has a great runway ahead of it.”