The bull run in 2023 is exclusive to the technology sector, similar to the red-hot energy stocks in 2022. Growth-oriented companies took a beating with the rapid rise in interest rates. But as of this writing, the sector is outperforming the broader market year to date (+35.55% versus +5.96%).
Developing trends and the Bank of Canada’s pausing interest rate hikes benefit BlackBerry Limited (TSX: BB), Real Matters Inc. (TSX: REAL), and Thinkific Labs Inc. (TSX: THNC). The battered stocks last year are leading the way.
Ongoing comprehensive review
Could the hard luck of BlackBerry end this year and reward investors with significant gains? The erstwhile mobile phone maker is now a provider of world-class intelligent security solutions. Current investors are happy with the 57.37% year-to-date gain (at $6.94 per share) following a 63% overall loss in 2022.
The $4 billion company helps government agencies, organizations, business enterprises, and institutions enhance their cybersecurity capabilities. BlackBerry’s software powers devices, cars, and the Internet of Things and prevents, detects, and responds to cyberattacks.
BlackBerry’s financial results in 2023 could be better, but the business outlook is encouraging. Management and the Board have initiated a comprehensive review of the portfolio, including strategic alternatives. The review looks to restore interest in the company and eventually deliver significant shareholder benefits.
Strength and scalability
Real Matters provides services for the mortgage lending and insurance industries while seeking to capture a significant share of a large addressable market. The $398.7 million company relies on its proprietary technology and network management capabilities to strengthen its competitive position and increase revenue.
Based on market analysts’ forecasts, the current share price of $5.48 (+31.1% year to date) could climb 66% in one year. In the first half of fiscal 2023 (six months that ended March 31, 2023), total revenue declined 62.6% year over year to $75.8 million. Notably, the net loss reached $7.2 million compared to the $2.1 million net income from a year ago.
Nevertheless, management believes in the strength and scalability of its network management platform in a lower market volume environment. Real Matters’ CEO, Brian Lang, said, “As we look forward to a normalized mortgage market, we are confident that we have the balance sheet, the team, the capacity and the scale to grow.”
Fastest-growing payment products online
Thinkific Labs is vastly improving financially, with 20% revenue growth to US$14.1 million in Q1 2023 versus Q1 2022. Its net loss was US$7 million, 42% lower than a year ago. The $371.9 million company has a software-as-a-service platform where entrepreneurs can create, market, sell, and deliver online courses. At only $2.35 per share, this tech stock is up at a 25% year-to-date gain.
The silver lining is Thinkific Payments, which has surpassed US$100 million in payments volume processed. Management said its platform is one of the fastest-growing embedded payment products on the internet. Its CFO, Corinne Hua, said the business is at the beginning of a momentum shift, and Thinkific will exit this year on the path to profitability. At only $2.35 per share, the year-to-date gain is 25%.
Soaring tech stocks
The tech stocks in focus are soaring despite the financial losses. However, they should be turning the corner soon through the novelty of their products and services.
