5 Canadian Tech Stocks That Appear to Be Overbought

The Canadian tech stocks on our list trade at an average forward EV/EBITDA of 26.5x

SmallCapPower | June 1, 2018: The Canadian Venture Capital Association (CVCA) reported on Tuesday that a total sum of $690M was invested in 139 Canadian tech companies in Q1 2018, a 7% increase from the prior-year quarter. As the Canadian tech industry grows, tech hubs could continue to develop in cities such as Toronto and Vancouver. The Canadian tech stocks on our list today trade at FY2019 EV/EBITDA multiples of 26.5x, a significant premium relative to their peer average of 18.6x.

Nanotech Security Corp. (TSXV:NTS) – $1.18
Electronic Equipment & Parts

Nanotech Security is a Canada-based tech company that sells two bill authentication technologies to avoid counterfeiting. Its KolourOptik technology is a nanoscale hole stamp, which creates a holographic-like image. As well, their optical thin film filters light to shift color at different angles.

  • Market Cap: $80.1 Million
  • EV/EBITDA FY2018: N/M
  • Forward EV/EBITDA FY2019: 28.5x
  • YTD Total Return: -20.3%

Symbility Solutions Inc. (TSXV:SY) – $0.49
Software

Symbility Solutions offers technological solutions for property insurance and mobile applications. The Company’s property insurance applications enable claims collaboration, mobile field estimates, and analysis tools. The Intersect division creates custom mobile and web applications for a wide variety of clients, including LCBO and Second Cup (TSX:SCU). On May 8, Symbility closed the sale of its health division to Telus (TSX:T).

  • Market Cap: $114.0 Million
  • EV/EBITDA FY2018: 56.9x
  • Forward EV/EBITDA FY2019: 29.7x
  • YTD Total Return: 15.5%

Kinaxis Inc. (TSX:KXS) – $83.67
Software

Kinaxis provides cloud-based subscription software for supply chain operations. The Company’s RapidResponse software connects data, processes and users onto a single platform to give a consolidated view of a client’s entire supply chain. As a result, the software allows users to monitor progress in real time, improving operational performance.

  • Market Cap: $2,146.2 Million
  • EV/EBITDA FY2018: 49.1x
  • Forward EV/EBITDA FY2019: 36.0x
  • YTD Total Return: 9.0%

Real Matters Inc. (TSX:REAL) – $4.78
Software

Real Matters is a Canada-based technology company whose platform serves as a marketplace for mortgage lending and insurance related services. Residential mortgage and residential/commercial property insurance appraisers in Canada and the U.S. are able to compete on the Company’s proprietary platform, which provides users with transparency and efficiency. The Company’s Canadian platform, Solidifi is utilized by five of the top seven Canadian banks and has a network of 3000+ appraisers. REAL’s stock price fell 23% on May 29 following the failure of an important U.S. contract deal.

  • Market Cap: $368.5 Million
  • EV/EBITDA FY2018: 44.0x
  • Forward EV/EBITDA FY2019: 18.0x
  • YTD Total Return: -52.6%

Computer Modelling Group Ltd. (TSX:CMG) – $9.49
Software

Computer Modelling Group (CMG) is a Canada-based computer software company serving the oil and gas industry. The Company develops and licenses a reservoir simulation software for international oil companies and technology centers in ~60 countries. The Company also provides professional services including consulting, training and contract research activities.

  • Market Cap: $761.2 Million
  • EV/EBITDA FY2018: 23.2x
  • Forward EV/EBITDA FY2019: 20.5x
  • YTD Total Return: 0.0%

Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.

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