The TSX Venture Exchange (TSXV) hosts some of the most exciting, and volatile, Canadian technology stocks. When controlling for market capitalization, growth, and share-price appreciation, you can start to weed out the contenders from the pretenders. Below we look at two rising tech companies that have exceeded expectations based on all three metrics: Sangoma Technologies Corp. (TSXV: STC) and Drone Delivery Canada Corp. (TSXV: FLT).
Sangoma Technologies (TSXV: STC)
- Market Cap: $76.7 million
- Stock Growth (2018): 56%
- Annual Revenue Growth: 111.1% (June 2018)
- Free Cash Flow: $5 million (June 2018)
2018 was a big year for Sangoma Technologies, the Markham, Ontario-based unified communications provider. The company more than doubled its annual revenue through June 2018 while significantly outperforming its peers in terms of return on capital employed (ROCE). A company’s ROCE helps investors determine how much pre-tax income it earns on capital invested. Using that as a backdrop, Sangoma’s ROCE is double the industry average. At the same time, the company grew its EBITDA by more than 2.5 times.
Sangoma boasts some of the world’s largest technology and telecommunications companies as its customers, including Microsoft, Verizon, VeriFone, Motorola Solutions, and AT&T. Back in October, the company announced that it expects fiscal 2019 revenue to exceed $100 million, an ambitious but attainable target following the acquisition of Alabama-based Digium, a communications technology provider that serves 170 countries.
Drone Delivery Canada (TSXV: FLT)
- Market Cap: $183.7 million
- Stock Growth (2018): 53.8%
- Annual Gross Income Growth: 34.5% (2017)
- Free Cash Flow: N/A
In terms of percentage growth, Drone Delivery Canada was the third best-performing stock on the TSXV last year. The Vaughan, Ontario-based company is emerging as a key cog in the drone delivery industry by designing and commercializing new logistics platforms for retailers and government agencies.
While still in its development phase, the drone delivery and dropshipping market is expected to take off in the coming years, eventually expanding at a compound annual growth rate of 21% from 2022 to 2027, according to Research and Markets. This gives Drone Delivery Canada a large addressable market while still enjoying first-mover advantage.
Drone Delivery Canada has achieved several major milestones in the last six months, including signing a $2.5 million agreement with Moose Cree First Nation to utilize its drone delivery system. In February of this year, the company unveiled the Condor, its farthest-ranging cargo delivery system with a payload capacity of 180 kilograms. The company is just ramping up, too, having recently announced that its Vaughan facility will be fully operational later this year.
Conclusion
Canada’s emerging tech landscape is abuzz with opportunity, but only if you know where to look. Sangoma Technologies and Drone Delivery Canada are rising stars based on the aforementioned value metrics. Despite their impressive growth, they can still be had for relatively cheap.
Disclaimer: Author has no investment positions in Sangoma Technologies or Drone Delivery Canada.
About Author
The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Grizzle hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.