Open Text (OTEX.TO)

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.

Software has been a great sector to be focused on over the last 6-7 months. It is a sector that benefits as companies increase capital spending. A couple of months ago, the stock broke from $45 and traded to $52 and left a big gap in the chart. In the last 3-4 weeks, a lot of the higher multiple stocks pulled back a little coming into the end of the quarter. This one pulled back and closed the gap that it left in the chart. This is a pretty good entry point here. He would use $44-$45 as a Stop.

PE of 15-16, which is a good valuation. Don’t think you can get this more inexpensively than the current $55. The other thing he likes is the consistency of its performance. Every year its ROE is consistently 23%-24%. Good long-term buy and hold.

(Top Pick Feb 1/13, Up 82.89%) The multiple got revised higher. It was growth by acquisition, but now the market thinks they have a good migration strategy into the cloud. A good story and they are delivering. 11 times earnings is reasonable, but they are at 16 times now. As they migrate into the cloud the multiple should increase, but he took some money off the table for a while. It is a show me stock now.

(A Top Pick Feb 1/13. Up 91.73%.) Had a great move and is probably still a good, long term story. Growing by acquisition. New management is in place.