My money is still on Sensio (SIO), my top pick for 2012, and NCP's Garcea has a 1.50 target. But some of the other's in the Cantech Letter look interesting. I've been following TNG and ZMS for a while, but no position in either of them.
Australian Minister for Resources and Energy Martin Ferguson: “You’ve got to understand, the resources boom is over. Anyone with half a brain knows that.”
Is there a sector rotation taking place in Canada?
While resource plays have been a drag on the Canadian markets for more than a year, the story certainly isn’t unique to our country. Last week, Australia’s resources minister Martin Ferguson went as far as to say that country’s resources boom, one that has almost exactly paralleled Canada’s, is at its end.
“You’ve got to understand, the resources boom is over,” he told the BBC, adding: “Anyone with half a brain knows that.”
In Canada, tech stocks have performed better, but the sector is now tiny. The space has, in fact, grown smaller with a recent trend of premium priced takeouts of medium sized techs such as Miranda Technologies, 20-20, Zarlink and MOSAID.
Will that interest, which is coming mostly from US companies and private equity firms, trickle down to Canadian techs with smaller market capitalizations? The coming months will go a long way towards determining the direction of Canada’s public tech sector. For now, we take a look at ten of the more interesting Canadian tech stocks trading under fifty cents. We rank these highest to lowest, according to their most recently reported annual revenue numbers.
1. CriticalControl Solutions (TSX:CCZ)
August 31st Closing Price: $.30
August 31st Market Cap: $15.7-million
Calgary-based CriticalControl Solutions was founded in 1999 by current CEO Alykhan Mamdani. The company supplies data management and enterprise content management tools to half the provincial ministries of the Alberta government, but the bulk of its revenue comes from sales to oil and gas companies. Higher fuel prices means more demand for CriticalControl’s gas composition management, gas chart integration and field device control technologies, particularly in the United States energy service sector, where the company has looked to expand. CriticalControl is consistently profitable, and has grown its revenue from just $23-million in 2007 to nearly $50-million in fiscal 2011. The company’s clients include Suncor, PetroBakken, BP, and ConocoPhillips.
2. Norsat (TSX:NII)
August 31st Closing Price: $.49
August 31st Market Cap: $28.5-million
Norsat, which was founded in 1977, designs and builds communications equipment such as antennas, portable satellite systems, microwave components, and maritime systems that are used in difficult environments. The company, which nearly went under midway through the last decade, was skillfully rescued by long time employee Amiee Chan, an engineer who became CEO in 2006. Chan put the company on solid enough financial footing to acquire coveted long time peer Sinclair Technologies early in 2011.
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3. Tio Networks (TSXV:TNC)
August 31st Closing Price: $.385
August 31st Market Cap: $17.95-million
Founded in 1997, Vancouver-based Tio Networks specializes in billing solutions to the “unbanked”; a segment of society that, in the US alone, could be as many as thirty million households that simply do not deal with conventional banks. The company, which now boasts more than 60,000 physical location endpoints to its bill payment processing network, rose to public attention early in 2011, when PG&E, the utility that powers two-thirds of California turned to Tio for a mobile payment app. Tio’s revenue has grown from $14.2-million in 2008 to $36.5-million in fiscal 2011.
4. Intermap (TSXV:IMP)
August 31st closing price $.15
August 31st Market Cap: $11.91-million
Intermap, which was founded in 1996 and is now based in Colorado, began its corporate life by designing 3D digital elevation maps. In 2002, however, the company embarked upon an ambitious project called NEXTMap, with the goal of providing 3D terrain data for the entire surface of the world. The NEXTMap data library already contains millions of square kilometres of high-resolution elevation data, and provides realistic displays of topographic information including vegetation and cultural features such as buildings and roads. The project, however, has been costly. Intermap lost (US) $13.6-million, or $.19 cents per share in 2011, after a whopping loss of $97.8-million (U.S.), or $1.73 per share in fiscal 2010. Recently, however, the company has put things on better footing, earning $800,000 on revenues of $8-million in the second quarter of 2012.
5. Serenic (TSXV:SER)
August 31st Closing Price: $.26
August 31st Market Cap: $3.86-million
Serenic, which was founded in 1999, designs and sells accounting software solutions for nonprofits, international NGOs and the public sector. Serenic used Microsoft Dynamics NAV, which has been described as one of the most advanced ERP systems on the market. Through modification and the addition of enhanced functionality, created its flagship product, Serenic Navigator. On the business side, Serenic revenue is coming less from direct sales and more from its expanding partner channel. The company has added partners in the United Kingdom, Africa and Lebanon. A recent sale to a local Ugandan government was the third African local government to have selected and adopted Serenic solutions, said management.
6. Transgaming (TSXV:TNG)
August 31st Closing Price: $.205
August 31st Market Cap: $13.8-million
Toronto-based Transgaming got its start more than a decade ago, designing porting software that allowed PC gamers to play games on other platforms without the time and cost of rewriting code. The software became especially useful to gaming giant Electronics Arts because it could save money on coders while publishing simultaneously on multiple platforms. With this model, TransGaming revenue crept up from $1.59 million in fiscal 2008 to $5.07 in fiscal 2011. Two years ago, however, the company announced a more ambitious plan; it was partnering with Intel to create GameTreeTV, an on demand gaming system that works much the way Netflix does for movies. While the rollout of the GameTreeTV was plagued by delays, momentum in 2012 has been decisive, including the acquisition earlier this year of the interactive TV division of Oberon Media, a New York-based games distributor. That pickup added more than a hundred game titles to TransGaming’s portfolio, including iconic Hasbro titles such as Scrabble, Risk, and Monopoly
7. RMS Systems (TSXV:RMS)
August 31st Closing Price: $.23
August 31st Market Cap: $11.39-million
Over the past decade, The use of advanced technology has become more or less essential to the the oil patch. Calgary’s RMS Systems has been both a beneficiary of and a leader in this trend. The company designs web-based remote drilling data retrieval software that allows companies to keep up with their wells remotely. Management says its RigManager Electronic Drilling Recorder allows drillers of oil and gas wells to view the data that the drill bit sees from the comfort of their own home, office or mobile device.
8. Sensio (TSXV:SIO)
August 31st Closing Price: $.40
August 31st Market Cap: $21-million
Founded in 1999, Montreal-based Sensio develops and markets stereoscopic image-processing technologies that facilitate the creation and delivery of 3D content. Sensio’s patent protected S2D switch allows users to switch viewing mode of a 3D feed from 3D to 2D or between different 3D view modes. means the Montreal-based company now has agreements with the top two 3DTV manufacturers in China, Hisense and TCL. Northland Capital Partners analyst Ralph Garcea thinks Sensio’s technology has a chance to become worldwide standard. He has a price target of $1.50 on the stock.
9. iSign Media (TSXV:ISD)
August 31st Closing Price: $.305
August 31st Market Cap: $20.44-million
Back in 2007 iSign, a fledgling digital signage company with about fifty installations in Vancouver, developed a method of using the Bluetooth frequency to broadcast content from the sign to mobile phones that came within proximity. That slick technology attracted Alex Romanov, who had once built startup Alpine Stereo into a company that held over 52% of Canada’s high end car audio market. Romanov bought the company and almost immediately made a deal to unveil it in Asia with a company called Best Denki, (which means “Best Electric” in Japanese). The company’s first deal, in 2008, was a success. iSign equipped nine stores with hardware and software, and was identifying over half-a-million phones per month, with a 23% download rate. Clarus Securities analyst Sean Peasgood has a $.85 cent target on iSign.
10. Zecotek (TSXV:ZMS)
August 31st Closing Price: $.37
August 31st Market Cap: $25.3-million
Vancouver-based Zecotek, which dates its history back to 2004, is the brainchild of Zerrouk, an English educated PhD in Theoretical Physics, who became a leading expert in photonics technologies. Today, after investing more than $25 million in its technology, Zecotek owns title to or controls more than fifty-five patents and applications and is on the verge of commercializing its laser systems, high-performance crystals, solid-state photo detectors and other imaging and 3D display technologies.Most of the recent action around Zecotek, including a patent infringement lawsuit against Saint-Gobain and Philips that was launched in February, is centered around its imaging division. But Steve Palmer, a fund manager with AlphaNorth Asset Management told Cantech Letter recently that he believes each of the company’s three distinct operating divisions could be worth more than its current overall value.
-At publication date, Cantech Editor Nick Waddell owns shares of Serenic and his company, Cantech Communications, is engaged to provide investor relations services to the company. Serenic is a sponsor of Cantech Letter.
-Zecotek is a sponsor of Cantech Letter.
-Cantech Letter Editor Nick Waddell owns 50,000 shares of Sensio, which he purchased in the open market On Friday, March 2nd and Monday, March 5th.