Growth prospects for the Canadian small cap tech stocks on our list may not be fully priced into their stock prices
SmallCapPower | July 12, 2017: When looking at growth stocks, the price of the stock tends to reflect almost all the short-term growth potential of a stock, which is why the stock price will fall if the company does not meet earnings expectations. Using the PEG (Price/Earnings/Growth) ratio, however, you can identify companies whose growth is not fully priced into the stock, which mean you could see generous capital appreciation if the company meets earnings expectations, and less downside if the company does not. Today we have identified four Canadian small cap tech stocks with the lowest PEG ratios, using the blended growth rate, which factors in past growth, short-term growth, as well as long-term growth.
Nexj Systems Inc. (TSX: NXJ) – $3.74
IT Services & Consulting
Nexj Systems Inc. is a Canada-based company, which provides enterprise customer management solutions to the financial services industry. The Company’s solutions include customer relationship management (CRM) for financial services and insurance; customer process management (CPM) for client onboarding and know your customer (KYC), and customer data management (CDM) to deliver a view of customers across line of business and regional data silos. The Company has operations in the United States, Canada, Asia Pacific and Europe. The Company offers solutions for wealth management and private banking, corporate and commercial banking, capital markets, and insurance.
- Market Cap: $79 million
- PEG: 0.04
- Adjusted EPS (LTM): 0.13
Pivot Technology Solutions Inc. (TSX: PTG) – $2.34
IT Services & Consulting
Pivot Technology Solutions, Inc. focuses on the strategy to acquire and integrate technology solution providers, primarily in North America. The businesses acquired by the Company designs, sells and supports integrated computer hardware, software and networking products for business database, network and network security systems. The Company primarily serves customers throughout the United States. The Company, together with its portfolio companies and partners, delivers solutions that enable organizations to design, build, implement and maintain computing and communication infrastructure that addresses their business needs. The Company enables businesses to extend their enterprise through mobility solutions to better connect business partners and customers.
- Market Cap: $94 million
- PEG: 0.13
- Adjusted EPS (LTM): 0.08
Photon Control Inc. (TSXV: PHO) – $1.38
Electronic Equipment & Parts
Photon Control Inc. designs, manufactures and distributes a range of optical sensors and instruments to measure temperature, pressure, position and flow. The Company provides engineering services for customized optical measurement systems. The Company’s products include Fiber Optic Temperature Sensors, Spectroscopy and Focus2.0 Optical Gas Flow Meter. Its Fiber Optic Temperature Sensors include various temperature converters along with temperature measurement immersion sensors, contact sensors and life science sensors. Its spectrometers facilitate measurements in the ultra-violet, visible and near-infrared wavelengths, ranging from chemical composition and quantification to color measurement and radiometry.
- Market Cap: $150 million
- PEG: 0.66
- Adjusted EPS (LTM): 0.06
Points International Ltd. (TSX: PTS) – $11.03
Online Services
Points International Ltd. (Points) provides a range of e-commerce and technology services to loyalty program operators using a common infrastructure. These services include a range of white label or private branded e-commerce services (Loyalty Currency Services) that enable the sale of loyalty currencies (such as frequent flyer miles, hotel points and credit card points), both retail and wholesale, and support the loyalty program consumer offerings and their back end operations. The Company offers the consumer-focused Points Loyalty Wallet that allows users to track, manage and access multiple loyalty rewards programs through the Points.com Website. It also offers Points Travel, which is private label travel e-commerce platform designed specifically for the loyalty industry.
- Market Cap: $164 million
- PEG: 0.71
- Adjusted EPS (LTM): 0.11
Disclosure: Neither the author nor any of the principals at Small Cap Power, or their family members, own shares in any of the companies mentioned above.
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