Open Text (OTEX.TO)

Enterprise content management. Grew a little bit organically and then by acquisition, paying down the acquisition before moving on. They are getting more organic growth. They are trading at 12 times forward earnings. Margins are coming higher. It is growing with a good business model and in the right space. (Analysts’ target: $54.09).

It had not been doing anything when all the tech names were flying. Their recent acquisition is working and margins are going to go up.

He owned many years ago. He revisited it last fall but is still not seeing any organic growth. It is a much more expensive stock now. He is not thrilled by the incentivization of management.

He was researching it in the last couple of weeks. See Top Picks. They have done a good job of growing by acquisition. They should improve as they integrate these acquisitions. The big game changer is announcing of more deals. He likes the name. You have to trade in and out of it. Wait for it to pull back over the next couple of quarters.

This reported in November and sales were up 20% and earnings were up 21%. Free cash flow is huge at $500 million on a 4th quarter trailing basis. ROE of 16% and is forecast to rise to 18.6% for the June 30 year-end. Dividend yield of 1.5%. (Analysts' price target is $40.)

A software stock that had been left behind because of a couple of acquisitions. It is up nicely today because of a surprise announcement that it will be added to the TSX-60 index. Historically these stocks go up a couple more percent and stay there after being added to the TSX-60.

He does not have a large position. It is a neutral size (3%). He is looking for technical strength before adding or he might exit if it showed weakness. They are digesting recent acquisitions. This is at a reasonable level to enter a position. On a long term they have a good track record and is the kind of company they like to own.

He would own it. He recently acquired it. There are not a lot of tech stocks in Canada. It is a good cash generator and you don’t pay a lot for it. It has stability. They are a consolidator for smaller tech companies. He really likes the name.

Great story but it's forming a base right now, there is nothing wrong with that, but he likes to buy on breakout, but depending on your style, you can buy at the bottom of the base. He would never buy at the top of the base since it hasn’t proven breakout yet. It’s not bad, buy at a breakout or buy at the bottom of the base if you are patient.

Right around October to January of each year, the stock has moved up. Currently, the chart shows a nice base has been formed and it is testing its all-time high, and there is good reason it is going to break that very shortly. Seasonally, this looks very good right through until the end of January, when you might want to take some profits.

Shows a nice uptrend with a little bit of a breakdown. Not enough buying power to make a higher high. He is neutral on this. The price action does not look like it will make a higher high. Not bearish yet.

A market consolidator in business software, helping large businesses organize information, storing it and retrieving it. Their acquisition policy is buying up competitors. Did a couple of acquisitions earlier this year, and the market is waiting to see how those work out. Dividend yield of 1.6%. (Analysts’ price target is $40.)

Basically, a growth by acquisition story. Organic growth is not great. It doesn't trade at an expensive multiple. Doesn't feel this is anything unique, which is why it doesn't garner a high multiple. Would prefer something like Descarte (DSG-T).

This has been a winner. They tend to do the rollup acquisition strategy very well. A lot of software companies have had a hard time migrating from the old license business, to the Cloud business, and this company has done that exceptionally well. They've broadened their product offering as well as their marketing scope. Has a lot of joint venture arrangements. Not that expensive, trading at 10 or 11 times operating cash flow.

After the last quarter, this came under a little pressure. The stock has a great, long term growth story. A lot of software companies have got a hard time migrating from the old “sell a license” to Cloud-based businesses where they have recurring revenue. This company has done it. Dividend yield of 1.6%. (Analysts’ price target is $40.)