The Canadian tech stocks on our list have industry-low EV/EBITDA multiples
SmallCapPower | April 2, 2018: U.S. tech stocks have dropped 6% over the past month, driven primarily by the Cambridge Analytica controversy and self-driving car crashes. Currently, the Dow Jones U.S. Technology Index is down 1% since the start of the year, while the S&P/TSX Capped Information Technology Index is up 8% over the same timeframe, despite the TSX being down 7%. As a result, the Canadian tech stocks on our list today could be considered value plays.
Celestica Inc. (TSX:CLS) – $13.29
Semiconductors
Celestica is a Canadian tech company that provides a variety of process improvement solutions to the electronics manufacturing segment. Celestica’s services include design and development, engineering services, raw materials sourcing, assembly & testing and supply chain management solutions. On January 24, the Company announced the acquisition of Atrenne Integrated Solutions, a durable electromechanical solutions provider focused on aerospace applications for US$139M.
- Market Cap: $1,884.6 Million
- YTD Total Return: 0.8%
- Enterprise Value to EBITDA LTM : 4.6x
- Forward Enterprise Value to EBITDA FY2018: 4.1x
- Peer Median Enterprise Value to EBITDA LTM: 10.3x
- Peer Median Forward Enterprise Value to EBITDA FY2018: 9.1x
Intertain Group Ltd. (TSX:ITX) – $14.65
Online Services
Intertain Group is a Canada-based online gaming company that offers bingo and casino games through a variety of separately-operated brands. Intertain is the largest online bingo-led operator in the world.
- Market Cap: $286.6 Million
- YTD Total Return: 2.1%
- Enterprise Value to EBITDA LTM: 4.6x
- Forward Enterprise Value to EBITDA FY2018: 4.3x
- Peer Median Enterprise Value to EBITDA LTM: 10.3x
- Peer Median Forward Enterprise Value to EBITDA FY2018: 9.1x
Points International Ltd. (TSX:PTS) – $12.50
Online Services
Points International is a Canada-based online services company that offers a loyalty program platform, allowing purchase of loyalty rewards such as air miles. Points’ e-commerce platform integrates travel booking options with purchase options across a wide network of partners.
- Market Cap: $183.5 Million
- YTD Total Return: -3.8%
- Enterprise Value to EBITDA LTM: 8.9x
- Forward Enterprise Value to EBITDA FY2018: 4.9x
- Peer Median Enterprise Value to EBITDA LTM: 10.3x
- Peer Median Forward Enterprise Value to EBITDA FY2018: 9.1x
Baylin Technologies Inc. (TSX:BYL) – $3.97
Communications & Networking
Baylin Technologies is a Canada-based tech company focused on creating antennas for mobile, networking and wireless infrastructure industries. The Company’s mobile division produces antennas for mobile devices, which typically contain between three to seven antennas built into the handset. Its networking division creates antennas for Wi-Fi routers, home networking devices and land mobile radio products. Its wireless infrastructure division works with network carriers to produce distributed antenna systems to meet their requirements. From its production facilities in Asia, the Company produces 250M antennas per year, with the capacity to ramp up to 300M.
- Market Cap: $124.3 Million
- YTD Total Return: 15.4%
- Enterprise Value to EBITDA LTM: 40.4x
- Forward Enterprise Value to EBITDA FY2018: 5.8x
- Peer Median Enterprise Value to EBITDA LTM: 10.3x
- Peer Median Forward Enterprise Value to EBITDA FY2018: 9.1x
Pivot Technology Solutions Inc. (TSX:PTG) – $2.04
IT Services & Consulting
Pivot Technology Solutions is a Canada-based IT solutions provider. The Company provides multi-vendor solutions, allowing customers to obtain their tech solutions from one source. Pivot services over 2,000 customers through its eCommerce portal and 130,000 sq. ft. production facility.
- Market Cap: $82.0 Million
- YTD Total Return: -5.7%
- Enterprise Value to EBITDA LTM: 12.0x
- Forward Enterprise Value to EBITDA FY2018: 6.9x
- Peer Median Enterprise Value To EBITDA LTM: 10.3x
- Peer Median Forward Enterprise Value To EBITDA FY2018: 9.1x
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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