Converge Technology Solutions (CTS.TO) Buy,…

Converge Technology Solutions (CTS.TO)

5.99

-0.00 (0.00%)

as of Apr 23, 2025, 8:00:00 pm Market Open.

159 watching

PAST TOP PICK

(A Top Pick Jul 12/21, Down 36%) They do IT outsourcing for small/medium business. CTS buys new companies and increase cross-selling by introducing new services, especially high-margin managed services rather than selling hardware. EBITDA margins should increase from 5% to 10% in the next few years. Still early days in its strategy.

BUY

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Quarter was good. Revenue grew 77%, beat estimates by 10% and EPS more than doubled to 8 cents, beating estimates by 25%. The company made five acquisitions year to date and organic growth was decent at 7%. Cash flow conversion was strong at 82%. Backlog looked healthy and showed good growth. Gross margins came down slightly, but management expects them to rise in the next quarter due to more software sales expected. Management also noted improvements on the supply chain side with regards to hardware deliverables from 4-6 months to 2-3 months (normally 4-6 weeks). Overall, CTS is well-positioned. No major concerns about the quarter. Negative momentum on the stock is more market-related than company-specific. Unlock Premium - Try 5i Free

PAST TOP PICK

(A Top Pick May 11/21, Up 27%) Management team executing very well. Expecting the company to grow organically and through M&A. Once interest rates & market volatility reduces, expecting stock price to rise.

BUY ON WEAKNESS

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Continues to view the name positively.The weakness is probably from the bad market for tech and growth than with the company itself. Benefits from many tailwinds such as organisations transforming their data processes. Acquisition strategy is very disciplined. Unlock Premium - Try 5i Free

PARTIAL BUY

Not in his fund, but in separately managed accounts. Regionally focused, end-to-end IT service provider. An acquirer. Horizontal offerings, whereas CSU is more vertical. Buy in thirds here around $9.30, 8.75, and 8.25. Put a stop around $8. (Analysts’ price target is $12.32)

PAST TOP PICK

(A Top Pick Aug 16/21, Down 10%) A fast-growing IT services company, founded in 2017 and now generates $2 billion in revenues. Early Q4 results were better than expected. It's growing quickly and he expects more growth in North America and Europe. Management guides $5 billion annually in revenues by 2025 with $500 million of EBITDA. If so, the stock will hit $25.

HOLD

Believes company has long runway of acquisition opportunities. Organic revenue growth continues to increase. Recent tech selloff not affecting business. Increased cash flow will present more opportunities to grow for company. Will continue to hold.

BUY

Great Canadian story. Build up a portfolio of IT service providers, allowing them to offer multi-vendor tech solutions. 2.2B company. 20% from here, average analyst price target of $12.32.

BUY

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Continues to like this company. Remains a profitable tech consulting company with strong growth. Cash position is strong and valuation is cheap. Management is disciplined and their acquisition strategy is clear. Good upside is expected over the next few years. Could see multiple expansion. Unlock Premium - Try 5i Free

DON'T BUY

CTS vs. ASAN Go with ASAN, it's the cutting edge company out there for collaboration and work management. These days, go with the larger companies. ASAN's market cap is only 13B, but it has heavy hitters at the top. His 12-month price target is $103.40.

COMMENT

IT consulting. Growth by acquisition. Very positive over the long term. Europe growth will be successful.

BUY

They own a lot of this. The services side of technology has done well. Digitization and cloud adoption fit well for their acquisition strategy and they just invested in Europe. A lot of opportunity going forward.

BUY

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Their growth strategy is primarily acquisitive. They also see tailwinds from rising demand for software and IT services. Management has a clear plan and has met targets well. There is room for greater institutional ownership over time. Unlock Premium - Try 5i Free

BUY ON WEAKNESS

End-to-end IT service providers. Very local. Caters to smaller businesses. Acts like a consultant. Blockchain solutions and IT spend optimization solutions. Price target of $13.50. Don't buy here. Tempting around $10.25 and ladder it in.

BUY

Growth by acquisition story. In the business solution business. As long as this continue to grow, they will generate cash. One source of concern was issuing equity to fund acquisitions. Did not think it was a high quality business but they have continued to make acquisitions and this should continue to work.

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Converge Technology Solutions (CTS.TO)