A hidden gem often has a leading position in the niche market, even if it is small today, along with evidence of growing demand, strategic partnerships or international reach. And of course you want all that for a great price. That’s why we’re looking at today Enghouse systems (TSX:ENGH).
About Enghouse
Enghouse systems (TSX:ENGH) has all the hallmarks of a tech stock that could quietly emerge as Canada’s next big tech unicorn. Enghouse is a software company specializing in communications, networking and video technology, serving enterprise customers in industries such as telecommunications, public safety and transportation. What makes it special is the strategy. Enghouse acquires, integrates and optimizes profitable niche software companies around the world. That acquisition-driven model gives the company access to recurring, mission-critical revenue streams and allows it to grow without taking on significant debt or diluting shareholders.
Enghouse has quietly built a global footprint with operations in more than 25 countries, and its portfolio now includes dozens of specialized software solutions that customers rely on every day. Many of these systems are deeply embedded in customers’ activities. So once installed, these are incredibly difficult to replace, ensuring long-term contracts and fueling dividends. In fact, the company has paid and increased its dividend for more than fifteen years in a row – something few Canadian tech companies can claim.
Another important strength is the management approach. Under founder and CEO Stephen Sadler, Enghouse has remained conservative, profitable and shareholder-focused. His patience could pay off big time over time, especially as Enghouse positions itself in high-demand sectors such as unified communications, contact center software and video collaboration. These all show structural growth due to the integration of artificial intelligence (AI) and digital transformation trends.
The numbers
Financially, Enghouse distinguishes itself through its rock-solid balance sheet. It has no long-term debt, hundreds of millions in cash, and consistently generates strong free cash flow. That war chest gives the country the opportunity to make opportunistic acquisitions, especially as smaller technology companies face higher financing costs in the current market. While many tech stocks are burning cash, Enghouse is quietly using its reserves to buy growth in the sell-off.
Furthermore, the tech stocks’ business model is built on longevity. Enghouse focuses on acquiring software with low churn and high recurring revenue. These stable, cash-generating assets give Enghouse a defensive position that allows it to thrive even in times of recession. Technology stocks’ gross margins typically hover above 70%, and management’s focus on cost control means profits translate directly into free cash flow. That financial discipline is exactly what separates long-term investors from speculative growth stories.
Despite all these strengths, Enghouse remains undervalued by the broader market. In fact, at the time of writing, the stock is trading at just 15.3x, which is virtually unheard of among tech stocks. Meanwhile, it’s quietly growing in the background, supported by a strong balance sheet, recurring revenues and a growing dividend. For investors looking for a stock that can grow steadily for years, Enghouse is the right choice.
In short
Enghouse stock could be Canada’s next big tech unicorn because it’s quietly doing everything right — all while offering a 5.72% dividend yield at the time of writing. This is essentially what $7,000 invested in the tech stocks could yield right now.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| ENGH | $20.83 | 336 | $1.20 | $403.20 | Quarterly | $6,998.88 |
All in all, Enghouse offers a scalable business with recurring cash flow, operating debt-free, paying a rising dividend and reinvesting wisely in growth. It’s the kind of disciplined, under-the-radar compounder that not only survives market cycles but thrives through them, rewarding patient investors who see its power before the masses do.
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