A Canadian cybersecurity stock to buy for the long haul

Summary

  • The United States and its western allies, including Canada, have accused China of coordinating widespread cyberattacks.
  • Organizations that are at risk of facing cyberattacks may earmark more capital to secure their data from any theft.
  • This, in turn, could bring more traction to cybersecurity companies that offer secure communication channels to their clients.

 

Cybersecurity became a hot topic of discussion once again as the United States and its western allies, including Canada, accused China of coordinating widespread cyberattacks.

Government agencies and corporate firms have been facing massive cyber threats in the recent years. Organizations that are at risk of facing cyberattacks may earmark more capital to secure their data from any theft.

This, in turn, could bring more traction to cybersecurity companies that offer secure communication channels to their clients.

On that note, let us explore a TSX-listed cybersecurity stock that investors may want to take a look at.

Open Text Corporation (TSX:OTEX)

Open Text Corporation facilitates cybersecurity solutions that support its customers in accumulating, recovering, and unearthing complex data.

Earlier in July, the Ontario-headquartered technology company partnered with Google Cloud to expand its operation and facilitate information management solutions to public and private enterprises.

Stocks of Open Text Corporation have gained nearly nine per cent year-to-date (YTD). The software firm’s share price has also climbed nearly eight per cent in the last one year to surpass the S&P TSX Application Software Index, which has declined eight per cent in the same period.

Open Text stock is currently priced at C$ 62.98 apiece and holds a market cap of C$ 17.23 billion.

The tech scrip swelled by 14 per cent in the last nine months. It presently has a return on equity of 3.76 per cent and earnings per share of US$ 0.76.

The cybersecurity company also delivers dividends of US$ 0.201 apiece on a quarterly basis, with a dividend yield of 1.54 per cent. The tech enterprise has had an impressive average dividend growth of nearly 13 per cent for the last five years.

In its third quarter of fiscal 2021, the software firm posted operating cash flows of US$ 63.6 million, up against that of US$ 50.3 million in Q3 FY20.

The company’s cloud services and subscription segment generated revenue of US$ 355.8 million in Q3 FY21, up 4.8 per cent year-over-year (YoY). Its consolidated revenue was US$ 832.9 million in Q3 FY20, noting an increase of 2.2 per cent against US$ 814.7 million a year ago.

Open Text’s one-year price chart against moving average multiple. (Source: Refinitiv)

At the previous price of US$ 63.23, Open Text’s price trajectory was moving in the bullish zone against its long-term moving average of US$ 58.40 apiece. A collaboration with government agencies could bolster the stock’s growth in the second half of 2021.  

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