Could defence spending power Evertz Technologies?

Murray Wealth Group CEO and CIO Bruce Murray says Evertz Technologies (Evertz Technology Stock Quote, Chart, News, Analysts, Financials TSE:ET) could see a major new opportunity from drone warfare, while its existing business and dividend provide downside support.

Speaking on BNN Bloomberg’s Market Call on June 30, Murray said Evertz is a well-managed Canadian company with no debt, about $500-million in sales and a strong position in broadcast replay technology.

“When you’re watching ESPN or watching the ballgame or the hockey game and they immediately go back and do the replay, that’s the technology that Evertz has,” Murray said.

The investor said the core business has been solid, though more replacement-driven than high growth, and the company pays a regular dividend of about 82 cents annually, along with occasional special dividends.

“You’re getting a very nice yield, and there’s no debt,” Murray said.

Murray said the more interesting upside could come from defence, where Evertz’s real-time video and routing technology may have applications in drone warfare. He said militaries need the ability to manage and interpret large volumes of real-time visual information as drone use expands.

“They need that for drone warfare because you’ve got a thousand drones in the air,” Murray said. “You’ve got to be able to know which one to go, and Evertz has that technology.”

Murray said defence represented only about 5% to 10% of Evertz’s business last year, but he sees the potential for much larger military contracts from the U.S., Europe or Canada.

“If you’re wrong, you’re still going to get that nice dividend,” he said.

The stock was up 33.81% over the previous 12 months and 20.29% over five years. Of the analysts covering the stock, three rated it “Buy,” one rated it “Hold” and none rated it “Sell,” with a consensus target of $17.75.

-30-