Open Text (OTEX.TO)

Really fell out of bed not that long ago. Missed expectations 2 quarters in a row. They always struggle with organic revenue growth and he had always hoped that it would really catch on and get a few consistent quarters. Thinks they will deploy a lot of capital on acquisitions and that they are an acquisition target. Would like to see organic growth start to stick, which is going to come through their Cloud business. He is going to wait until the stock shows some kind of a turnaround.

This pulled back on its earnings. They are trying to go more towards Cloud, but there is a lot of competition there and they are kind of a stock with more legacy software systems. While having poor earnings in the short term, they generate a tremendous amount of cash flow from their legacy products. It has been an acquisition machine historically, and have proven to be pretty good operators. If you are looking for a longer-term Hold, this is fine.

He quite likes it. You will always be a slave to the quarterly earnings report. After they underperform for a couple of quarters you want to look at it. He prefers IBM-N, which is bigger and more stable.

CGI Group (GIB.A-T) or Open Text(OTC-T)? Although he owns both, there is no question that he would choose CGI. This trades at around 12X 2015 earnings. For a quality growth company, he really feels that valuation is tough to beat. Also, CGI has been paying down its debt quite readily, so they are primed for an acquisition. If you are looking for a game changing acquisition, it is more likely to come with CGI. It is also cheaper and has a very nice ROE profile.

CEO has some health challenges so stock is trading off a bit. They installed a new dividend of 4% and the stock took off like a rocket. Much better than owning US tech. It would be worth taking a serious look at.

(Market Call Minute) Thinks it will end up getting taken out.

The sector is in favour. Corporations are making lots of money. Everybody needs productivity and corporations are willing to invest in this. Thinks it is in the right neighbourhood.

There is no sign of a top on this. The best way to play this is by having a group of stocks that all work together. The best low risk way to play it is through iShares S&P/TSX Information Technology Capped (XIT-T).

(A Top Pick Nov 26/13. Up 31.83%.) Still likes this a lot. Part of the thesis on this was that they were coming out with a whole new product refresh that was going to cause an uptick in license revenue growth, or they were going to use some of their cash to make some acquisitions. Both of those things have happened. Have a big Cloud component now. Their Red Oxygen is now selling very well into their customers. Last quarter they had over 20% license growth. Earnings beat quite handily and margins were growing. Has added to his holdings. Thinks they have good long-term prospects.

Looking at their cash flow generation, they are quite lucrative. They keep taking the cash flow, consolidating the industry and buying more businesses that kind of fill in some of the parts around the edges that they don’t offer. Nothing wrong with it.

When you decide to sell in real time you only find out you sold too early with hindsight. Can it double from here? Who knows? There was a material gap up recently. If it comes back into the gap, that is a bad thing.

(A Top Pick Aug 26/13. Up 68.98%.) This has had a 2 for 1 stock split in the last year. This is a classic example of the street being completely behind the curve on this.

There aren’t too many choices of technology stocks in Canada. He has gone to the US for his technology. This one is fine, but you can find deeper companies in the US, and he wants some exposure there, so it is a natural area to go to.

Ranks in the middle of his pack. Not super keen on it. A good earnings announcement could changes things.

Chart shows the stock is pulling back. The 200 day moving average lies somewhere around $45. There is potential for this to trace back to the $45-$46 area and this is where he would probably seriously consider buying it.