2 Tech Stocks You’ve Never Heard of But Should Consider

Kinaxis Inc. (TSX:KXS) and Computer Modelling Group Ltd. (TSX:CMG) are two technology companies that offer specialized software worthy of an investment.

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Selecting the right investment mix can be daunting. Whether it’s picking the long-time market favourite with countless quarters of strong earnings, or the value-priced new entrant that has a massive amount of potential, the market has a mix of investments for everyone.

Technology stocks in particular are intriguing options. Unlike traditional retailers or miners that have a tangible product that is sold, technology companies sell an overall experience that is packaged in the premise of a promise. That promise comes in the form of added efficiency, savings, and expediency over what would be an otherwise overly complicated and mundane process.

Here are two technology stocks that not only deliver on that promise, but are reshaping their respective industries.

Kinaxis Inc. (TSX:KXS) is an Ottawa-based software company that develops supply chain management (SCM) and sales and operations planning (S&OP) solutions. The company has an impressive suite of customers, comprising some of the largest manufacturing companies in the world, all of which have complex supply chains that need to be managed.

Why should you consider Kinaxis? SCM solutions are the unsung heroes of manufacturing companies. They are responsible for billions of dollars in savings over the long term and save businesses a lot of time.

In the most recent quarter, Kinaxis reported revenues of $32.5 million, representing a 20% improvement over the same quarter last year. Subscription revenues soared 29% over the same quarter last year, coming in at $23.9 million. Much of that growth can be attributed to new contract and renewal business subscriptions secured over the course of the past year.

Profit for the quarter came in at $3.2 million, or $0.12 per share diluted, which was slightly lower than the $3.4 million, or $0.13 per share diluted, that was posted in the same quarter last year. Kinaxis noted that this decrease was attributed to investments the company made to both data centre capacity and professional services.

Kinaxis also provided a full-year guidance update for the remainder of the year. Annual revenue is now set to fall in between $140 million and $144 million, whereas subscription service revenue is now set to grow between 26% and 28%.

Kinaxis currently trades at just under $88 and is up year to date by over 40%.

Computer Modelling Group Ltd. (TSX:CMG) is a software company that has a focus on the energy sector. Computer Modelling Group’s impressive portfolio of software includes tools and simulators used by the energy sector for advanced reservoir recovery processes.

Computer Modelling Group’s software is widely recognized across the mining and energy sectors and counts on some of the largest energy and gas companies in the world as key clients. Today, the company has over 570 clients located in over 58 countries around the world, including all of the top-20 heavy oil producers in the Canadian market.

Why should investors consider Computer Modelling Group? The energy sector has recovered somewhat from recent slowdowns, and there is a renewed interest in Washington for improvements and seeking out new energy infrastructure projects. Computer Modelling Group is well positioned in the industry to benefit of the continued growth of the energy sector as a whole.

In terms of results, Computer Modelling Group posted earnings of $0.07 per share in the most recent quarter on revenues of $19.058 million. Computer Modelling Group also provides investors with a monthly dividend of $0.10 per share, which, at the current stock price, results in a 4.04% yield.

Computer Modelling Group currently trades at just under $10 and has a P/E of 32.37.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Demetris Afxentiou has no position in any stocks mentioned. The Motley Fool owns shares of COMPUTER MODELLING GROUP LTD. Kinaxis and Computer Modelling Group are recommendations of Stock Advisor Canada.

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