TSX’s technology sector could make a grand comeback in next year after a hiatus this year. Shopify will likely remain as the top draw, although smaller tech firms could steal the limelight from the largest publicly listed company in Canada.
Based on market analysts’ buy ratings and price forecasts, Real Matters (TSX: REAL) and Quarterhill (TSX: QTRH) could increase 50% in 2022. Thus, their current share prices are good entry points.
Leading proprietary technology
Growth investors are familiar with Real Matters, because it’s a back-to-back TSX30 winner. The tech stock is among TSX’s top growth stocks in 2020 (rank 22) and 2021 (rank 16). This $612.62 million company operates in the mortgage lending and insurance industries, although the bulk of the business is in the United States.
Real Matters provides technology and network management solutions to clients. The core services are residential mortgage appraisals for purchase, refinance, and home equity as well as title closing. Top U.S. lenders are among its client base.
Despite the 0.9% revenue increase and 3.6% net income decline in Q4 2021 versus Q4 2020, Real Matters CEO Brian Lang is encouraged by the results. The company achieved double-digit market share in the retail channel with the launch of its first tier-one and the rollout of a new tier-two lender, both title clients.
Lang said management is confident in Real Matters’s ability to achieve its fiscal 2025 objectives. The company expects to double its U.S. appraisal market share and triple its U.S. Title market share from fiscal 2020 levels. Market analysts are bullish and predict the current share price of $7.11 to climb 53.31% to $11.82 in 12 months.
Bright future
Quarterhill should be on investors’ radars by now. The $307.22 million growth-oriented company is a niche player, operating in the in the Intelligent Transportation System (ITS) industry. Its subsidiary, Wi-Lan Inc., is a leader in Intellectual Property licensing.
Although Quarterhill reported significant declines in consolidated revenue and adjusted EBITDA in Q3 2021 versus Q3 2020, the future is bright. Its president and CEO, Paul Hill said the acquisition of ETC during the quarter aligns with its M&A growth strategy. Hill said, “First, it brings scale to our ITS business which enhances the overall financial profile of Quarterhill with more visible and consistent revenue and adjusted EBITDA.”
Hill added that strong position in vertical tolling and a second platform in the ITS industry gives Quarterhill additional competitive advantages. The tech stock trades at only $2.70 per share but pays a modest 1.85% dividend. Market analysts see an upside potential of nearly 50% in one year.
Special mention
Everz Technologies (TSX: ET) is worth including in your watchlist, because it’s a rare gem in the tech sector. The $997 million company designs, manufactures, and sells video/audio infrastructure solutions for the television, telecommunications, and new-media industries.
In the nine months ended September 30, 2021, Evertz reported 30.32% and 46.45% increase in revenue and net earnings versus the same period in 2020. Besides the 12-month average price target of $16.83 (28.38% increase from $13.11), this tech stock pays a generous 5.49% dividend.
Budding superstars
Real Matters, Quarterhill, and Evertz are budding tech superstars in 2022 that can deliver outsized gains for would-be investors.
