- A Canadian tech firm expanded its data center in the Netherlands to promote cyber resilience.
- A TSX-listed data security enterprise posted a revenue of US$ 107 million in Q1 FY22 from its cybersecurity division.
- Few of these companies are scheduled to pay dividends to their shareholders.
The need to uphold cybersecurity has existed since the dawn of technology. The pandemic, however, has inflated its importance further.
With the massive increase in online transactions, remote working, etc. amid lockdowns, data hacks also rose, making cyber safety the need of the hour. And on the backdrop of this urgency, some cybersecurity-focused companies also noted substantial stock market movement.
Let’s explore some Canadian cybersecurity stocks that are witnessing an increased demand for their products and services.
1. Absolute Software Corporation (TSX: ABST)
This technology company markets and develops cloud-based control device that provides security and management of computing devices. Absolute Software draws a major share of its revenue from the US, although it has operations based in Canada and elsewhere in the world. It held a market cap of C$ 704.4 million (at the time of writing).
The investors expect to receive the next set of quarterly dividends of C$ 0.08 apiece on August 27, 2021. The dividend yield was 2.23 per cent on August 19, 2021.
The stock price of Absolute Software closed at C$ 14.21 on August 19, 2021, and was trading nearly 17 per cent above its 52-week low of C$ 12.25 (November 19, 2020). The stock price increased by nearly 15 per cent in the last nine months but decreased by eight per cent over the past year.
Absolute Software posted revenue of US$ 31.8 million in the fourth quarter of fiscal year 2021, up 17 per cent Year-Over-Year (YOY). Its net loss was US$ 3 million in the same quarter.
On the valuation front, its earnings per share stood at 0.10 and return on assets (ROA) was 2.02 per cent.
Within the one-year time frame, the stock price of Absolute forms a series of highs and lows and appears to be on an uptrend.
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2. Patriot One Technologies Inc (TSX: PAT)
This company with a market cap of C$ 73.86 million develops security systems. Patriot One has developed radar technology accessing threats actively.
Stocks of Patriot One closed at C$ 0.49 on August 19, and were trading nearly 29 per cent above its 52-week low of C$ 0.38 (December 22, 2020). Over the past year, the stock price dipped 42 per cent.
Patriot One posted revenue of C$ 0.2 million in Q3 FY21, down from C$ 1.2 million in Q3 FY20. Its net loss was C$ 32 million in the same quarter.
The company landed multiple government projects during the quarter totaling C$ 2.4 million.
3. Blackberry Limited (TSX: BB)
This company with a market cap of C$ 7 billion was once a smartphone manufacturing firm and now provides exclusive softwares to enhance end-to-end communication for diverse companies. The softwares designed by Blackberry are used in sectors like medical, automobile, etc.
The stock price closed at C$ 12.26 apiece on August 19, and was trading roughly 119 per cent above its 52-week low of C$ 5.82 (October 2, 2020). The stocks of Blackberry expanded by nearly 102 per cent over the past year.
Blackberry posted a total revenue of US$ 174 million in Q1 FY22, while the revenue from the cybersecurity division was US$ 107 million in Q1 FY22. Its gross margin stood at 66 per cent in the same quarter.
The senior leadership of Blackberry announced the launch of BlackBerry® Optics 3, a cloud-based endpoint detection and response solution.
On the valuation front, the P/B ratio of Blackberry stood at 3.77, and D/E was 0.57.
4. VIQ Solutions Inc. (TSX: VQS)
VIQ is a technology company that develops, licenses, and distributes digital solutions and technology services in Canada, the UK, the US, Australia, and other countries. It held a market cap of C$ 168.31 million and outstanding shares of 25.62 million as of August 18, 2021.
The stock price closed at C$ 6.57 on August 18, where it was trading close to 33 per cent below its 52-week high of C$ 9.79 (May 3, 2021).
The stock price expanded by nearly 69 per cent over the past year. However, on a year-to-date basis, it only increased by 12 per cent.
VIQ Solutions posted total revenue of US$ 8.2 in Q2 FY21. Its gross profit was US$ 4 million and net loss was US$ 10.5 in the same quarter.
The pandemic delayed the revenue coming from the UK and Australia, as per the management’s commentary.
The P/B ratio stood at 6.31, and D/E was 1.79 on the valuation foothills.
5. Destiny Media Technologies Inc. (TSX: DSY)
This C$ 19 million market cap company provides secure digital distribution solutions. The services of Destiny Media are based on watermarking and proprietary solutions. Its customers and clients are based around the globe.
The stock price closed at C$ 1.87 on August 19. On this day, the stocks traded almost 156 per cent above their 52-week low of C$ 0.73 (October 15, 2020) and nearly 43 per cent below the 52-week high of C$ 3.28 (March 24, 2021).
The stocks of Destiny Media went up by nearly 137 per cent over the past year but it only expanded by 10 per cent on a quarter-to-date basis.
Destiny Media posted a service revenue of US$ 1.08 million in Q3 FY21, up from C$ 0.94 million in Q3 FY20. Its net income was US$ 0.07 million in the same quarter.
As per the valuation metrics, the price-to-earnings (P/E) ratio stood at 30.80 and ROE was 14.95 per cent, and ROA was 11.32 per cent.
6. Open Text Corporation (TSX: OTEX)
Open Text is based in Ontario, Canada. This technology company develops software that allows clients to archive and retrieve unstructured information. It held a market cap of C$ 18.3 billion and outstanding shares of 271.75 million on August 19, 2021.
The investors expect to receive the next set of quarterly dividends of US$ 0.221 apiece on September 24, 2021. The dividend yield was 1.63 per cent on August 19, 2021. The five-year dividend grew at 13.46 on average.
Stocks of Open Text closed at C$ 67.43 on August 19. It was trading over 40 per cent above its 52-week low of C$ 47.95 (November 2, 2020).
On a QTD basis, the stock price expanded only by six per cent. However, over the past year, the stock price increased 16 per cent.
The senior management commented on the expansion of its data center in the Netherlands. They believe that this center will add greater flexibility. The storage of data is considered to promote cyber resilience as per the regulations.
Open Text posted total revenue of US$ 893.5 million in Q4 FY21, up from US$ 826.6 million in Q4 FY20, increasing eight per cent YOY. The adjusted EBITDA was US$ 314.8 million, and free cash flows were US$ 268.8 million in the same quarter.
On the valuation front, the EPS stood at 1.45, ROE was 7.46 per cent, and ROA was 3.04 per cent.
The technical chart pattern within the one-year time frame indicates an upward trend, forming a series of new highs and lows.
7. TECSYS Inc (TSX: TCS)
Tecsys markets and develops enterprise-wide distribution softwares and also other related services. The C$ 754 million market cap company conducts business in Canada, the US, and other countries.
The stock price closed at C$ 51.5 on August 18. It was trading at 100 per cent above its 52-week low of C$ 25.75 (September 4, 2020).
Stocks of Tecsys expanded by nearly 86 per cent over the past year. It only increased by four per cent on a YTD basis.
The company paid quarterly dividends of C$ 0.065 apiece on August 6, 2021. The dividend yield was 0.5 per cent on August 19, 2021. The five-year dividend grew at 18.58 on average.
Tecsys Inc. posted a total revenue of C$ 32.4 million in Q4 FY21, up from C$ 27.7 million in Q4 FY20. Its adjusted EBITDA was 3.91 million, and its net profit was C$ 2 million in the same quarter.
The EPS of Tecsys was 0.5, ROE stood at 11.39 per cent, and ROA was 5.76 per cent on the valuation metrics.
The cybersecurity boom calls for making very stringent data security and data protection laws. The companies that provide services related to cybersecurity must follow the industry best practices and abide by the code of conduct.