Descartes (DSG.TO)

This is in the logistics business. It has been a very strong performer over the last few years, but has come under pressure over the last few weeks, but pulled right back into the 150-day moving average. Technically it is still okay. He likes the long-term theme. If it broke the 150-day moving average, he would be gone. In the near term, it provides a pretty good entry point.

It has been a good performing company because they executed well. They have a unique position. He missed this one. 59 times forward earnings vs. an industry average of 26.

Downside in case of a correction? It is following an uptrend and testing the trend line. If it breaks the trend line and also the 200-day moving average then it’s a signal to get out. Until then you could probably continue to hold. There would be some support level around $30.

He likes this company. A “software as a service” business model. Has very consistent revenues. For guidance, they say “whatever our revenue was this quarter, that is our guidance for the next quarter”. This usually works and they add a couple of percentage points to it. Trading at a really high multiple, but that’s because they have this great recurring revenue model. Once a customer gets entrenched with their offering, it would be such a hassle for them to switch over to something else. Very consistent for a tech company.

One of her favourite Canadian technology stocks. This grows organically and by acquisition, and through e-commerce.

(A Top Pick July/16. Up 44.92%.) Investors like this name because of its predictability. When a quarter starts, because of so much recurring revenues, they already know what 90% of revenue is going to look like. Because of this, they spend the last 90 days of the quarter trying to get the next 10% in. It is always a non-event when they come out with quarters, and portfolio managers love that, and pay up for it. A growth story and a play on global trade and on increasing returns on cross-border traffic. A very good, long term story.

It is really quite a good company. There is no question about it. He always likes to see an upward trend in the return on capital, which we have. Valuation is a little rich, but when you have a high quality company it tends to be justified.

A lot of technology companies sell beyond multiples he looks at as a value investor. This one has always been an extremely good company. They are at the forefront of their technology. Longer-term they are in a very good place. Trading at 52X forward earnings. You have to grow a whole lot to justify those kinds of multiples.

This is a growth stock, and is a beneficiary of what is happening with delivery. It is a logistics company, and the more delivery there is of anything, then this company is a beneficiary. Also, it is a growth by acquisition story and interest rates are great for them. (Analysts’ price target is $36.29.)

Technology companies tend to do particularly well in the fall. This one tends to bottom out about mid-August through to the middle of January. The average gain for that period is about 25% over the past 15 years. Currently, there is not much of a breakdown, but it is trying to push below its 50-day moving average. This implies that the buying pressure is no longer there. There is short-term resistance with the 20-day coming in at around $33.

A boring name, but stable. Every portfolio needs some boring names. There wasn’t any particular catalyst this year, but it is up 30%+ in the last 12 months. He likes the recurring income stream. At the start of every quarter, they know what 90% of their sales will be, and they spend the next 90 days working on that last 10%. That predictability is what investors like. (Analysts’ price target is $25.47.)

The chart is showing a pretty darn good upward trend. He wouldn’t call it super overbought. A great looking chart. If he is right about the market taking a breather in the next month or 2, you might get an opportunity at a lower price.

The big trend is pretty good. It might be overbought at this time and if it pulled back to the trend line you could buy it.

(A Top Pick Aug 7/15. Up 24.62%.) Transportation software, speeding things along whether shipping by truck, train, boat, plane. This is not cheap, as 85% of their revenue is recurring, and people like the visibility of that. Earnings growth is forecast to be 15% for the Jan 2018 year end against a 23 PE. It should continue to do well over the next 3 years because of the high recurring revenue.

A logistics software company. They’ve made a couple of good acquisitions and are expanding into Europe. A nice little company, good balance sheet, good acquisitions, good growth and very good growth expected over 2017 to 2016. He would put this in the top 25% of Canadian tech names.