The Canadian SaaS stocks (software as a service) on our list have outperformed the TSX by ~10% this year, with an average gain of ~89% year to date
SmallCapPower | December 11, 2019: There has been a paradigm shift in the technology industry. In the early 2000s, if you wanted to buy Microsoft Office, you would buy the disk at a store and install it onto your computer. When Microsoft created a new version of Office a couple of years later you would buy a new disk and reinstall it over the old installation. With the arrival of cloud computing this has all changed. Today, you can obtain a subscription to Microsoft Office and all software updates are downloaded automatically and you can even have your documents encrypted on Microsoft’s servers. This is an example of software as a service (SaaS) and this new business model has transformed the way technology companies operate. When once owning the software was imperative, now the ability to access the software is what matters. Today we have identified four Canadian SaaS stocks that have outperformed the TSX this year by 10% and are showing solid growth prospects for 2020. For reference, the S&P/TSX Composite Index has returned 18.3% year to date.
*Share price data as at December 9, 2019, data obtained from S&P Capita lQ
Carl Data Solutions Inc. (CSE:CRL) – $0.22
Canadian Tech – SaaS
Carl Data Solutions is a Canada-based company focusing on the next generation of data collection, storage, monitoring and analytic solutions for data-centric Industrial IoT enterprises. The Company develops cloud-based software analytics and dashboard solutions to provide Big Data-as-a-Service (BDaaS) solutions for industry and governments. Carl Data’s applications can collect any type of data from any sensor or source to produce detailed reports, predictive analytics, and real-time insights into infrastructure status. Carl Data’s innovative data platform is currently focused on Water/Wastewater Infrastructure, Mining and Solid Waste Management.
- Market Cap: $18.1M
- 90-Day Return: +37.5%
- YTD-Return: +238.5%
- 90-Day Average Trading Volume: 181,690
- FY19 Net Income: -$3.4M
- FY18 Net Income: -$4.7M
- YoY Net Income Growth: N/M
Open Text Corporation (TSX:OTEX) – $56.12
Canadian Tech – SaaS
Open Text is a developer of software products and services that assist organizations in finding, utilizing and sharing business information from any device. The Company designs, develops, markets and sells Enterprise Information Management (EIM) software and solutions. Its EIM offerings include Enterprise Content Management (ECM), Business Process Management (BPM), Customer Experience Management (CEM), Business Network, Discovery and Analytics. Its solutions incorporate collaborative and mobile technologies and are delivered for on-premises deployment, as well as through cloud, hybrid and managed hosted services models.
- Market Cap: $15,131.9M
- 90-Day Return: +3.2%
- YTD-Return: +26.1%
- 90-Day Average Trading Volume: 493,650
- FY19 Net Income: $285.5M
- FY18 Net Income: $242.2M
- YoY Net Income Growth: +17.9%
The Descartes Systems Group Inc. (TSX:DSG) – $54.97
Canadian Tech – SaaS
Descartes Systems provides a variety of software and services related to logistics, including route planning and telematics solutions for delivery fleets; customs and regulatory filing solutions; logistics messaging solutions; and software used by freight forwarders to run their operations. Descartes generally charges its customers on a subscription or per-transaction basis. On September 4, 2019, Descartes reported Q2/19 financial results, highlighted by EPS of $0.11 on revenue of $80.5M, which beat analyst estimates of $0.08 and $80.3M, respectively.
- Market Cap: $4,625.8M
- 90-Day Return: +4.7%
- YTD-Return: +52.6%
- 90-Day Average Trading Volume: 122,580
- FY19 Net Income: $31.3M
- FY18 Net Income: $26.9M
- YoY Net Income Growth: +16.4%
Computer Modelling Group Ltd. (TSX:CMG) – $8.55
Canadian Tech – SaaS
Computer Modelling Group (CMG) is a Canada-based computer software company serving the oil and gas industry. The Company develops and licenses its proprietary reservoir simulation software for international oil companies in ~60 countries. The Company also provides professional services, including consulting, training and contract research activities. For its fiscal quarter ended June 30, 2018, the Company reported net income of $5.0M, and paid out nearly $8 million in dividends. Meanwhile, the Company maintains $47.0M in cash on its balance sheet.
- Market Cap: $686.1M
- 90-Day Return: +34.8%
- YTD-Return: +40.4%
- 90-Day Average Trading Volume: 81,060
- FY19 Net Income: $22.1M
- FY18 Net Income: $20.8M
- YoY Net Income Growth: +6.4%
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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