One of my favourite Canadian technology stocks in recent years has been Open Text Corp. (TSX:OTEX). In this article, I’m going to discuss some of the key reasons I think this company has the potential to take off in the years to come.
Many investors continue to focus, and rightly so, on various high-flying tech stocks in the U.S. However, Canada does have a variety of excellent growth options for investors as well. Open Text is a software company providing mission critical software and solutions to a range of medium to large-sized tech enterprises globally. This business in and of itself is one which is poised for long term growth. The company has strong margins and its products offer an impressive value proposition. With demand for its core products very strong and likely to remain so for a long time, cash flow stability and accurate growth forecasts cannot be understated.
With approximately 80% of the company’s revenue coming in on a recurring basis, threats to Open Text’s bottom line from macroeconomic events are further muted. From a fundamental perspective, Open Text’s Q1 earnings show strength at a time when many companies are struggling in this department. Open Text reported earnings per share of $0.80 versus an estimated earnings per share of $0.68. Further, the company had a year-over-year earnings growth of over 11%, blowing many analyst’s expectations away.
Open Text’s business model has proven to be resilient and I like this company as a long-term tech pick for those interested in what Canada has to offer in this sector.
Invest wisely, my friends.
