When technical shares become too cheap to ignore, this is usually for a reason. Yet the market is sometimes just wrong. At the moment three Canadian technology companies are acting on what looks like bargain levels, with Fundamentals that quietly improve. If you are looking for growth at a reasonable price, Open text (TSX: OTEX), Light speed Trade (TSX: LSPD), and Good health (TSX: Well) All deserve a second look.
OTEX
OpenText has just completed its tax year with a mixed but significant story. At first glance, the total turnover year after year fell by 10%, dragged by the repulsion of non-core assets. But strip that and the company stabilizes. Cloud income continues to grow, by 2% for the year and accelerate to Q4. The technical shares also booked $ 683 million in capital returns to shareholders, including dividends and back purchase, which is not a small performance in today’s climate.
Investors have lately cooled on open text, partly due to sales and a dark prospect. But the new interim CEO is a 25-year-old veteran and the board confirmed his focus on information management for AI. Add a juicy forward price-gain ratio (p/e) below eight and a dividend yield of 3.5%, and this is one of the more compelling value to play in Canadian technology. The risk is in progress. OpenText must show that it can grow again. But if it even yields modest income profits next year, the benefit can surprise.
LSPD
Then there is Lightspeed. The technical shares have experienced a rough patch since the pandemic highlights, but the latest results show clear progress. Turnover increased by 15% year to year to $ 305 million in the most recent quarter, which made expectations. The gross margins extended to 42%. Adapted income before interest, taxes, depreciation and amortization (EBITDA) grew more than 50%, the number of customer locations increased and the annual turnover per user (ARPU) jumped. In other words, the core engine runs better.
Lightspeed is not yet profitable on GAAP -Basis and the losses are still visible on the profit -and -loss account. But the technical shares lean in payments and stimulates business efficiency, so that he will set himself up for a real operational leverage in the coming quarters. With a forward p/e around 36 and a price sales ratio under two, it is no longer a high flyer, but it is also not priced if a company that has just grown double digits of income with improvement of margins. The risk here is volatility. The share has been hit hard by sentiment fluctuations, but the basic principles are silent.
GOOD
Finally, Health has just posted his best fifteen minutes ever. Turnover increased 57% years to year to $ 357 million. Adapted EBITDA rose by 231%and the technical share booked the net income of $ 17 million. Well, also crossed a milestone with more than a million patient visits in Canada last quarter, with the real operational scale.
These technical shares have been rejected by some as too acquisitive or too complicated, but the story is shifting. Now it now leans harder in organic growth and reinforcement in his American exposure while doubling on Canada. With a forward p/e under 14 and a strong growth of the free cash flow, it is one of the few technical names that deliver on all fronts with growth, profitability and operational leverage. The risk? Healthcare remains a difficult space to navigate and integrating acquisitions always entails uncertainty. But the momentum here cannot be denied.
Bottom Line
OpenText, Lightspeed and good are all on very different journeys, but share one thing in common. Each acts on a rating that assumes low expectations. Yet everyone shows signs of Momentum that can make those assumptions wrong. If you want to add a few cheap Canadian technical names to your watchman or your portfolio, these three technical shares are worth keeping your radar.
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