I have to be honest, this is the first blog that I have posted that I have had to put in some EXTRA hard work into. I say that because Canada is truly lacking in the technology sector. We are by no means barren, but we do not have the type of technology sector compared to countries like the US, China and Japan. They truly drive the market for technology which makes it somewhat difficult to invest in the companies we have right here. We have the companies, but you have to really look pretty hard to find some good ones or the right ones that fit your portfolio.
Why do we lag behind in the tech sector you ask? There are many reasons behind this including rules, regulations, location and dominance. In most cases it makes more sense for a company to go to Silicon Valley, New York or Seattle because they can afford to draw in and attract that type of business. Those are also all major hubs and right on the coast with access to transportation across the ocean. Plus, once a company gets big enough it generally just gets bought out by one of the bigger guys and moves them where ever they want anyways.
Although we lag behind, there is still enough tech here to go around. Just take a big look at Shopify(SHOP). I feel like they are the Amazon(AMZN) of Canada. They are a multi-channel Ecommerce platform for online stores and businesses. Basically what they do is give you your own website to sell your own niche products that you want to sell. Since Covid-19 has happened, they have been skyrocketing. Why is that? Basically since people aren’t able to go to work they are just working from home and starting their own online business. Shopify is the best place to get that done and they offer the ability to do it with subscriptions. I honestly feel that they are WAY over valued, their share price got over $1200 on May 25th which is pretty crazy. They also just recently passed by Royal Bank(RY) for the biggest company in Canada by market cap. Thats pretty impressive.
Shopify(SHOP)-$978.32 Share price at close today, $116.8 Billion Market Cap, Dividend Yeild N/A and Dividend Payout Ratio N/A.
The only other real Behemoth in Canada is Constellation Software Inc.(CSU) and they are basically a software installation, development and customization company. They work in the private and the public sector so that means that they get the best of both worlds. During this recession they dipped down to just under $1200 a share but didn’t take to long bouncing back over $1500 and a strong earnings helped with that. They do pay a small dividend but its to be expected and their payout ratio I feel is very appealing and sustainable.
Constellation Software Inc.(CSU)-$1,499.44 Share price at close today, $31.78 Billion Market Cap, Dividend Yield 0.37% and Dividend Payout Ratio 26%.
Now we come to the number one tech stock on my watch list, Open Text(OTEX). They are a software development company with a platform designed to help organisations find, utilize and share business information. Their numbers are very much appealing to me from their EPS, P/E and yes of course their dividend. They have been around for a very long time and continue to grow their business in the right direction as you can tell from their charts. They are not as big as Shopify or Constellation but they can hold their own as they look like the most stable tech company at the top right now and have beat on their earnings the last 4 quarters in a row. Even with a recession and global pandemic that is VERY impressive.
This next one is a company that you may get a small chuckle at but I have followed them for probably the last 20 years on and off mostly because of their popularity. Blackberry(BB) formerly Research in Motion(RIM). They were truly an extraordinary company back in the day because their cellphones were the future and ahead of their time. EVERY single business person had one of their phones, it was the best. The problem is that they actually stopped looking to the future, they stopped changing and adapting. Blackberry basically just fell behind and shot themselves in the foot. They have since changed from a cellphone/tablet company to a software company. They are using their AI machine learning to help with autonomous driving and cyber security. Although they have been going through a big transition it seems that they are on the right track to be the company that they once were.
Blackberry(BB)-$7.38 Share price at close today, $4.1 Billion Market Cap, Dividend Yeild N/A and Dividend Payout Ratio N/A.
The last company that I want to talk about is something that has taken the world by storm in the last few years and crushing the taxi industry. I’m talking about Facedrive(FD) and i’m talking about ride sharing. The thing about facedrive is that they are mostly just in Ontario right now(which is almost half the population of Canada haha, jk). Seriously now though, they have some serious breakthrough stuff, you can actually request rides specifically from electric and hybrid vehicles(you can get gas as well so don’t worry). They have only been around for about 2 years and are really just starting to kick things off. They have plans to go global but I will just wait and see if they get to the rest of Canada first, so I will be watching them from a safe distance for now.
Facedrive(FD)-$10.71 Share price at close today, $965.66 Million Market Cap, Dividend Yeild N/A and Dividend Payout Ratio N/A.
There are many more tech companies in Canada and there are even ones who aren’t only software based. These are just a few that are the biggest and new coming stars that are out there right now. I’m always looking for new tech companies to invest in because it drives our future and who doesn’t want to support Canadian made technology. We have a lot of technology to be proud of and I hope we can have so much more in the future to look forward to. I also believe that Toronto will be comparable to silicon valley as they are truly trying to attract more tech companies and get that type of business there. Maybe we will one day be a part of the US, China and Japan for tech. But for now I will just stick to our short list and keep on watching.
That is all for today and remember everyone, invest in yourself first.