Open Text (OTEX.TO)

(A Top Pick September 27, 2017. Up 27%). This was out of favour when he bought it. It was down because it grows by acquisition. It bit off a couple of big acquisitions and the market was unsure how well it could manage them. As it turned out, they did well.

Likes it, but their financials are noisy after a recent purchase. Their chart has been bouncing around, but he sees this as an opportunity. Managers have increased shareholder value in recent years. He continues these managers to continue to execute well through organic growth and acquisition.

He is a happy shareholder of this one. He bought it because it had lagged the whole software cycle in the beginning. They made an acquisition that caused the stock to tumble – they saw that as an opportunity at $40. He would not be adding to his position at this value, but expects future valuation appreciation.

This has been a continuous grower and the business has been solid for the past few years. This is a stock that will let you sleep well at night.

They have been acquisitive but have not made a large one recently. The discount to the group could close over time.

(Past Top Pick, Feb.15, 2018, Up 15%) They grow by acquisition. They did a great migration to a cloud-based business. Valuations are cheap. Trades at 10x forward earnings and cash flow at 12x earnings.

If you have any kind of big data, whether you are government or big business, this is a player that can help you manage all of that. Historically they have been very acquisition-focused. We are seeing some of the fruits of that labour coming to fruition. (Analysts’ target: $58.07).

An overlooked Canadian tech company. Fantastic blaance sheet. There's organic growth through acqusitions. They've been on the bad side of shorts. Can be volatile, but steady when the market is forthy. Has recommend it before. (Analysts' price target: $58.07)

This company has been competing well through good acquisitions and he thinks it is well managed. Due to a lack of consistency in earnings it tends to keep the valuation multiples pretty low. This last quarter was great and the forecast looks promising. He is watching this closely and thinks it is an acquisition target (but has thought so for 10 years).

It has a lovely balance sheet. The problem is with the earnings and the intrinsic value of the company. Forecasts since 2014 show a steady progression in earnings but just a modest progression. He has only seen an increase in fair market value of 9% since then. He would wait for a setback. Wait for it to pull back to $40.

Really like action yesterday. Record territory, which is always positive. Nice recovery since drop in May. Broke through $47 resistance. If breaks above $48, start reducing. Below $45, sell.

They just announced a dispute with the IRS which affected the stock price today. He expects this to take years to resolve. Canadian software stocks have done very well over time. He would be a buyer on dips, and today’s news created a dip, so he would buy. The model price is $63, which gives a 26% upside from the current price. He would plan to hold this for longer than 5 years. 22. Amazon (AMZN-O)(Doesn’t Own)(Don’t Buy). If the S&P goes higher, certainly Amazon will go higher. It has positive equity, but it is too expensive for a value investor.

A Canadian software success story. He looked at it, but bought Constellation Software instead. That said, Open Text has delivered the goods.

The companies that are migrating from software licensees to cloud are the winners. They have done some great acquisitions. Trading at 9 times operating earnings. Yield 1.7%. (Analysts’ price target is $55.30)

He loves the software space. Once you hook a client to use your software, they never stop using it. This business generates a lot of cash. OTEX will generate $1 billion of operating cash flow in the next three years. They've done a great job growing EBITDA per share. OTEX is cheap consider 11x EBITDA vs. 17x among U.S. peers. Has had dividend growth for the past five years. (Analysts' price target: $55.07)