IDEAS: Awarded the Canadian Technology Stock of the Year for 2018, Sangoma
Technologies’ (TSXV: STC) shares are up 682% in value. The stock price has momentum
as awareness from new investors keeps building.
Investorfile's share price accumulation target of
$0.40 for Sangoma Technologies Corp. was reached on April 24, 2014. For the
record, we do not revise share price targets for our Investorfile Top Ideas -
Small Cap Value Stocks. We have positioned our blog to be one of the first
providers of a pragmatic perspective of a small cap company stock's potential
worth, where there may be uncovered value that has been largely overlooked by
the investment community.
This marks our tenth blog post about Sangoma Technologies
Corp. (TSXV: STC - C$1.64) since Investorfile first recommended this stock at
C$0.21 (See -Sangoma
Technologies: A small cap tech stock trading for value with prospects of growth).
Since that first blog post, the shares have appreciated 682% in value with more
upside on the horizon.
Over the past several years, our message
in each of our Sangoma Technologies blog posts has been very consistent: This
stock is significantly undervalued and continues to be an excellent buying
opportunity for small cap investors. Looking back, we must have been right. The
Company’s shares have appreciated in value in the months following each post.
Hence, we have written another post to help keep the momentum going!
Sangoma Technologies delivers Unified
Communications solutions for SMBs, Enterprises, OEMs, Carriers and service
providers. The Company’s scalable offerings include both on-premises and
cloud-based phone systems, telephony services and industry-leading
Voice-Over-IP solutions which, together, provide seamless connectivity between
traditional infrastructure and new technologies. Sangoma's products and services
are used in leading PBX, IVR, contact centre, carrier networks and data
communication applications worldwide.
Unified Communications (UC) is a
fast-growing market within the telecommunications industry. UC implies the
integration between modes of communications such as text messages, cell phone,
emails, conference calls, instant messaging, screen sharing, etc., as well as
being able to switch effortlessly between them to enhance the exchange of
information and ideas for a business operation.
In our last blog post in May of 2018
(See - We repeat: Sangoma Technologies is still a strong buy today) we
prognosticated that the Company could be on the verge of making its largest
acquisition to date. A couple of months later we were proven right when Sangoma
Technologies acquired its US
competitor, Digium Inc. This was a transformational acquisition which has
almost doubled the size of the Company. Post acquisition, Sangoma’s Management
stated that the Company should generate annual revenues in excess of C$100
million for fiscal 2019, which will end on June 30.
Since the acquisition of Digium, Sangoma’s Management
team has been busy integrating the two companies to maximize operating
efficiencies. While this is no easy task, according to Management reports, the
integration process is proceeding well. As such, the investment community is
beginning to recognize the achievements of the Company’s acquisition strategy.
Case-in-point: Sangoma Technologies was recognized
with the 2018 Award at the Cantech Investment Conference by being selected as the Technology Stock of the Year (TSXV); Sangoma Technologies was named to the
50 top Canadian stock picks for 2019 as chosen by the pros – from MoneySense; Both
Acumen Capital and Cormark Securities proclaim Sangoma Technologies to its 2019
list of Top Picks for Canadian small cap stocks.
The Investorfile blog has long felt that Sangoma’s
share price remained undervalued. But we feel that the "value gap” will begin
to close as awareness of the Company’s stock builds, which it is doing. If
this value is realized, we forecast the stock price could reach C$2.50 this
year. This valuation is supported by our analysis on appropriate revenue
multiples and Enterprise Value to EBITDA multiples based on fiscal 2020 (which
begins on July 1st) analyst expectations and financial guidance, which was
publicly disclosed by Company management. That said we believe there is still
over 50% upside for the stock price this year based on current trading levels excluding
further appreciation potential from future
acquisitions, should they occur.
We remain bullish on the prospects for Sangoma
Technologies. For two years running this stock has been on our annual Top Pick
list among our Top Ideas (See: Investorfile
top pick performer in 2018 may repeat gains in 2019).
The Company has approximately 51.5 million
Sangoma Technologies website: www.sangoma.com
Author Ownership Disclosure: TSXV: STC - Yes
This article is for informational purposes only. This article is based on the
author's independent analysis and judgment and does not guarantee the
information's accuracy or completeness. The information contained in this
article is subject to change without notice, and the author assumes no
responsibility to update the information contained in this article. The
information contained within this article should not be construed as offering
of investment advice. Those seeking direct investment advice, should consult a
qualified, registered, investment professional. This is not a direct or implied
solicitation to buy or sell securities. Readers are advised to conduct their
own due diligence prior to considering buying or selling any stock.
Investorfile.com is not
engaged in an investor relations agreement with Sangoma Technologies
Corporation nor has it received any compensation from Sangoma Technologies
Corporation for the preparation or distribution of this article.
The author of this article has
acquired and may trade shares of Sangoma Technologies Corporation through open market
transactions and for investment purposes only.