These TSX-listed technology names possess fundamentally strong financials that offer investors a more reliable and profitable method of investing in the tech sector
SmallCapPower | May 10, 2016: Tech stocks remain popular with investors, amidst global uncertainties, despite being more volatility than many other sectors. Earnings consistency and safety are important to many shareholders, thus one metric that should be used to assess a stock’s profitability is Return on Equity (ROE), which gauges the amount of profit generated using shareholders’ invested capital. As well, a current ratio above 2 provides greater liquidity as the stock’s current assets are double that of its current liabilities. Today, we have identified five Canada-listed stocks that satisfy both criteria, which could be a winning combination this year and beyond.
5 Profitable Tech Stocks
Kinaxis Inc. (TSE:KXS) – $47.19
Kinaxis Inc. is a TSX-listed tech company that provides cloud-based subscription software for supply chain operations. The Company offers RapidResponse as a collection of cloud-based configurable applications. RapidResponse provides supply chain planning and analytics capabilities that create the foundation for managing multiple, interconnected supply chain management processes, including demand planning, supply planning, inventory management, order fulfillment and capacity planning. The Company’s customers include companies in various industries, including high technology and electronics; aerospace and defense; life sciences and pharmaceuticals; industrial, and automotive.
- Market Cap: 825,955,800.49
- ROE (LTM): 22.6%
- Current Ratio (Q1): 2.56
- EPS ($) (FY2015): 0.61
Computer Modelling Group Ltd. (TSE:CMG) – $9.01
Computer Modelling Group Ltd. (CMG) is Canada-based computer software tech company engaged in serving the oil and gas industry. The Company is a supplier of advanced processes reservoir modeling software with a client base of international oil companies and technology centers in over 50 countries. It has 550 oil and gas companies and consulting firms in more than 55 countries. CMG’s software products include STARS, GEM, IMEX, CMOST and BUILDER. The Company also provides professional services consisting of highly specialized support, consulting, training, and contract research activities. While this TSX-listed stock is engaged in the oil and gas sector, it has been profitable throughout the recent energy market crash.
- Market Cap: 640,140,995.57
- ROE (LTM): 47.5%
- Current Ratio (Q1): 2.42
- EPS ($) (FY2015): 0.27
Evertz Technologies Ltd. (TSE:ET) – $16.96
Evertz Technologies Limited (Evertz) is a Canada-based tech company, which provides equipment to the television broadcast telecommunications and new-media industries. Evertz designs, manufactures and markets video and audio infrastructure equipment for the production, post-production and transmission of television content. The Company’s television broadcast equipment market segment is involved in the sale of hardware and software solutions including related services, training and commissioning.
- Market Cap: 991,594,214.95
- ROE (LTM): 20.0%
- Current Ratio (Q1): 5.62
- EPS ($) (FY2015): 0.78
Sandvine Corp. (TSE:SVC) – $2.61
Sandvine Corporation (Sandvine) is a Canada-based tech company, engaged in the development and marketing of network policy control solutions for high-speed, or broadband, Internet service providers. The Company products include Business Intelligence, Revenue Generation, Traffic Optimization and Network Security. Sandvine’s Network Policy Control solutions consists of a hardware platform and software modules that are bundled together to provide a system for broadband Internet service providers to identify, report on and take action on the data traversing their networks.
- Market Cap: 300,404,099.32
- ROE (LTM): 19.6%
- Current Ratio (Q1): 5.65
- EPS ($) (FY2015): 0.12
Vecima Networks Inc. (TSE:VCM) – $11.80
Vecima Networks Inc. is a Canada-based tech company, which designs, manufactures and sells products that enable broadband access to cable, wireless and telephony networks. Its products are directed at two markets: converged wired solutions, including a family of up converter and modulator modules that process data from routers and convert it to higher frequencies for transmission over cable to subscribers.
- Market Cap: 209,118,451.42
- ROE (LTM): 13.0%
- Current Ratio (Q1): 7.83
- EPS ($) (FY2015): 0.74
When screening for profitable stocks, investors must keep in mind the fundamental financial results that a company yields. Tech stocks which are TSX-listed are often times either startups trying to make it big, or established with a stable revenue stream. While the startup stocks may offer a chance at higher return on investment, investors must keep in mind that a company that continues to not be profitable for years is oftentimes deadweight to investors.