The energy sector was the whipping boy in 2020 when the global pandemic and oil price war sent energy stocks crashing. Shopify led the technology sector in preventing the TSX from reporting a negative return. However, things changed drastically in the second year of COVID.
Oil demand returned with a vengeance when governments opened borders and lifted travel restrictions. Most of the energy companies had incredible comebacks, including in their stock prices. Fast-forward to 2022 and it seems the energy sector will repeat as the runaway winner.
Meanwhile, Shopify is no longer Canada’s largest publicly-listed company. The tech phenomenon is far-third behind the Royal Bank of Canada and Toronto Dominion Bank. As of this writing, technology is the worst-performer among the 11 primary sectors with its 20.50% year-to-date loss.
Fortunately, bargain deals are available for growth investors looking for tech firms that could rebound faster than others. Converge Technology Solutions (TSX: CTS) and BlackBerry Limited (TSX: BB)(NYSE: BB) offer real value-for-money due to their visible growth potential.
Strong growth
Converge may be down year to date (-13.1%), but the current share price of $9.45 is still 65.3% higher from a year ago. Market analysts’ 12-month average price target is $13.75 (+45.5%), although it could climb by as much as 93.1% to $18.25. This tech stock is a performer owing to its 1,566.07% total return (154.97% CAGR) in 3.01 years.
The $1.99 billion software-enabled IT and cloud solutions company provides storage devices and systems, computer products, software, and peripherals. Its clients are from various industries in Canada and the United States. Management has yet to present its full-year 2021 results, but the preliminary data show impressive numbers.
Based on the unaudited results for Q4 and full-year 2021, net revenue increased 73% and 61% versus the same periods in 2020. Adjusted EBITDA growth were 43% and 53%, respectively. Converge’s organic growth for the year was 9% compared to the previous year.
Converge made several strategic acquisitions last year that should strengthen its skills. The company now has additional capabilities in the areas of AI, advanced analytics, business intelligence, data warehousing, and financial performance management.
Its CEO, Shaun Maine, stressed the strong growth, notwithstanding industry-wide supply chain issues throughout 2021. It bodes extremely well for Converge in 2022, Maine adds.
Cybersecurity threats
BlackBerry was an outperformer in 2021 not because of the meme craze. Investors were thrilled with the 40% total return. However, with the negative sentiment on tech stocks, the year-to-date loss is 26.6%. Based on analysts’ forecasts, the upside potential in 12 months is 47%.
The $4.97 billion provider of intelligent software and services should attract more investors this year due to heightened awareness in cybersecurity. Ukraine is under siege not only by military force but also cyberhackers. The government is enlisting cybersecurity professionals in its war efforts against Russia.
Before the war in Eastern Europe, BlackBerry released its 2022 Annual Threat Report. The report highlights an optimized cybercriminal underground that targets local small businesses. Eric Milam, BlackBerry’s VP of Research & Intelligence, said, “The infrastructure of the cyber underground has evolved so they can deliver more timely and personalized deceptions to the public.”
Rise to prominence
Technology is the hard-luck sector in 2022, but Converge and BlackBerry should rise in prominence as the year progresses.
