Canadian Cybersecurity Small Cap Could Be a Good ‘Defensive’ Portfolio Option

Absolute Software (TSX:ABST) shareholders have been rewarded with a 43% average annual return during the past 10 years

Capital Ideas Media | March 10, 2021 | SmallCapPower: As COVID-19 has accelerated our online activities, it has also created greater opportunities for criminals to steal our valuable data.

(Originally published on Capital Ideas Media on January 19, 2021)

Win Big With Our Small Cap Picks


Canadian company Absolute Software (TSX:ABST) is a cybersecurity company that specializes in endpoint security and data risk-management solutions, securing your data, all the devices that are part of your network, and all the applications/software your business uses, even when used remotely.

[Editor’s Note: Shares of Absolute Software have gained more than 10% since Capital Ideas wrote about the company about seven weeks ago.]

[Please click here to get immediate access to curated research in the weekly Capital Ideas Digest with our free 30-Day Trial.] 

Forrester Research estimates that enterprises will spend US$12.6 billion on cloud security tools by 2023, up from $5.6 billion in 2018.

Absolute has been a publicly-traded entity for more than 20 years and its shareholders have been rewarded with a 43% average annual return during the past 10 years.

As a bonus, the Company also pays a dividend and is currently yielding about 2%.

Raymond James analyst Adam Tindle wrote recently that he sees a “durable growth opportunity” for the Company and believes Absolute has a total addressable market in excess of 500 million devices.

He added that Absolute’s technology is fundamentally differentiated via an undeletable defense platform.

Needham analyst Scott Berg, meanwhile, believes Absolute Software is “just starting a compelling” turnaround that will boost “durable revenue growth” for several years.

The analyst pointed to several macro tailwinds that he thinks will bolster demand in Absolute’s end-markets, most notably work from anywhere arrangements that require new endpoint management strategies.

During Q1 2021, the Company’s revenue rose 11% year over year to a record $28.5 million, while its total annual recurring revenue increased 13% to $111.7 million. Absolute says more than 96% of its revenue is recurring.

To read our full disclosure, please click on the button below: