Interested in Tech Stocks? Here’s 1 With a Profit Margin Over 40%

Interested in tech stocks? Open Text Corp. (TSX:OTEX)(NASDAQ:OTEX) has an industry-leading profit margin over 40%.

| More on:
The Motley Fool

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Are you looking for a Canadian tech stock with solid results to add to your portfolio? Here’s one with an excellent profit margin to consider.

Open Text Corp. (TSX:OTEX)(NASDAQ:OTEX), founded in 1991, is a leader in enterprise information management and is headquartered in Waterloo, Ontario. It provides software and a platform to help businesses find, use, and share information.

Open Text reported fourth-quarter earnings on August 3 of US$0.60 per share, which is in line with industry expectations. This beat 2016’s fourth-quarter results by 34.83%. The company’s net income declined by 50.97% year over year compared to the same quarter in 2016 to $0.17 per share. That sounds bad, but it was among the best results in the industry. Earnings look better. Over the last three years, earnings have averaged 64.27% annually, topping the industry average of 40.84%.

Company net profit sits at a stellar 44.78%. This makes Open Text the industry leader on profits. The next closest competitor, Computer Modelling Group Ltd. (TSX:CMG), has a profit margin of 29.78%. Open Text’s return on equity also looks great at 37.22% — well above the 15-20% analysts typically look for. This is a company that’s good at taking investors’ money and turning it into solid revenues and profits.

The stock currently sells around the $40 mark, which puts it closer to its 52-week low of $38.89 than its 52-week high of $48.28. Analysts’ consensus only puts the stock trading around $44 for the next year. If they are right, there is still a little room for this stock to grow.

If you are an investor looking at income, Open Text offers a dividend. It currently offers a quarterly dividend of US$0.132 per share for an annual dividend of US$0.53 per share. This gives the stock a dividend yield of 1.65%. The company started paying dividends in 2013, and the rate has gone up each year since, which bodes well for income investors.

Investor takeaway

There are many positives about Open Text, particularly its ability to turn a profit. Past performance is never a guarantee of future performance, but this company is worth considering if you want to add a tech company, or simply one with solid profits, to your portfolio.

Should you invest $1,000 in Hamilton Enhanced Multi-sector Covered Call Etf right now?

Before you buy stock in Hamilton Enhanced Multi-sector Covered Call Etf, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Hamilton Enhanced Multi-sector Covered Call Etf wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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 Susan Portelance has no position in any stocks mentioned. The Motley Fool owns shares of COMPUTER MODELLING GROUP LTD and Open Text. Computer Modelling and Open Text are recommendations of Stock Advisor Canada.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Tech Stocks

Canada day banner background design of flag
Tech Stocks

The Top Canadian Stock to Buy With $5,000 in 2025

There are few Canadian stocks out there that offer the outlook of this tech stock, bound for more growth.

Read more »

ways to boost income
Tech Stocks

How I’d Invest $11,500 in Canadian Fintech Stocks to Revolutionize My Finances

Propel Holdings stock's recent dip could be a trading opportunity for long-term financial gains. Here's why the fintech stock is…

Read more »

Start line on the highway
Tech Stocks

Where I’d Invest $5,000 in Growth Stocks With Long-Term Potential Through 2030

DO you have $5,000 to invest to grow your wealth over the long term? These growth stocks could deliver strong…

Read more »

A shopper makes purchases from an online store.
Tech Stocks

Buy the Dip on the Return of Recession Stocks?

If a recession comes back, there are some stocks that could fair well afterwards. And this is one of the…

Read more »

data center server racks glow with light
Tech Stocks

April Opportunity: Where I’d Invest $7,000 in These 3 Tech Stocks Right Now

These tech stocks have solid growth potential and are trading at discounted valuation, providing a solid buying opportunity in April.

Read more »

The letters AI glowing on a circuit board processor.
Tech Stocks

If I Could Only Buy and Hold a Single U.S. Stock, This Would Be It

You don’t need 40 different stocks to build wealth. A few good ones can boost your portfolio, and this U.S.…

Read more »

cloud computing
Tech Stocks

2 Top Canadian Information Technology Stocks to Buy Right Now

These two Canadian information technology stocks are bargains amid the downturn in the broader market for long-term investors.

Read more »

A microchip in a circuit board powers artificial intelligence.
Tech Stocks

The Only 2 AI Stocks You’ll Need for Long-Term Growth

Here are two top Canadian tech stocks that could help you benefit from surging demand for AI technology and infrastructure.

Read more »