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Investorfile Top Picks for 2021 includes a perennial winner
Posted by: Gerry Wimmer
12/20/2020
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A four-time consecutive stock pick, Sangoma Technologies (TSXV: STC), joins Avante Logixx (TSXV: XX) and Caldwell Partners International (TSX: CWL) as small cap stocks that have the potential for oversized returns in 2021.

For a decade now, it has become an annual tradition for the Investorfile blog to select Top Picks from our current list of Top Ideas, all of which are small and microcap stocks. We try to foresee a few investment themes for certain companies that may have a positive impact on their share price as a "percentage gainer” for the year to come. As shared in our previous year-end posts, we do not advocate a short-term investing focus for generating investment gains in small cap stocks. That said, we have built up a track record over the past 10 years of being more right than wrong in generating investment gains with our annual Top Picks for the following 12-month period.

We want to reemphasize that our annual predictions do not in any way preclude the potential for any of Investorfile’s Top Ideas to become a top performing stock in 2021, along with our Top Picks for the year.

Investorfile predictions for 2021:

Our Top Ideas stock that will scale-up in size once again:
Top Pick #1 - Sangoma Technologies (TSXV: STC- C$3.60)

Sangoma Technologies Corp. is a trusted leader in delivering value-based Communications-as-a-Service (CaaS) solutions for businesses of all sizes. This communications segment includes small businesses to large enterprises which are looking for all the advantages of cloud-based communications at a fair price.

Previously, for three years running, Sangoma Technologies has appeared on Investorfile’s annual Top Pick list and it has not disappointed as a share price gainer in each of the three past years. To date, in 2020, its share price is up another 45%; therefore, we would not dare exclude this stock from our 2021 list.

We think the biggest near-term share price catalyst for Sangoma Technologies will be driven by the Company’s next acquisition. Over the last five years, Management has made over five acquisitions and each has been larger in scale. Sangoma has over C$93 million in cash on its balance sheet. We envision the next acquisition will grow the Company’s revenue base to over C$200 million annually and drive the market capitalization of Sangoma to over C$500 million in 2021.

Last Investorfile blog post (Nov. 2020):
Sangoma Technologies could be a $5.00 stock in 2021, with 85% upside

Our Top Ideas stock that could see its revenue trading multiple expand significantly:
Top Pick #2 - Avante Logixx (TSXV: XX- C$1.59)

Avante Logixx Inc. is a leading provider of technology-enabled security services. The Company acquires, manages and builds industry-leading security businesses by offering technology-enabled security solutions and a one-stop shop for security-conscious clients whose security is important and necessary.

It would be remiss for us not to mention that Avante Logixx was an Investorfile Top Pick last year and the stock price year-to-date has only generated a very modest return (but the share price is up significantly from its lows in 2020). That said our investment thesis for last year’s pick is starting to prove correct given the Company’s recent financial results as both revenue and EBITDA are showing strong momentum. Therefore, our conviction for this Top Pick is stronger than ever and again we think there will be "re-rating” of the stock’s revenue trading multiple expanding to at least one times its annual revenue run-rate, which is equal now to over C$3.00 per share. This implies is about 100% upside from current share price levels to be potentially gained in 2021.

Last Investorfile blog post (Dec. 2020):
Avante Logixx should see its stock price run past $3.00, for over 135% upside

Our Top Ideas stock price that will have a rebound year:
Top Pick #3 - Caldwell Partners International (TSX: CWL - C$0.90)

Caldwell Partners International Inc. is a premier executive search firm whose focus is on the high end of the employment search market for CEOs, CFOs, presidents, boards of directors and senior level positions, where an executive search is seen as an important business investment rather than an expense.

Caldwell Partners’ executive search business was impacted by COVID-19. Revenues and the Company’s stock price are down significantly from the prior year. But there is light at the end of tunnel and Caldwell’s operations are showing signs of a strong recovery. The Company is cash-rich and debt-free and Caldwell's Management has indicated that there is opportunity for growth, both internally and through acquisitions in the near term. That said, we feel there are several catalysts that could send this stock price much higher and, thus, it becomes a Top Pick for 2021.

Last Investorfile blog post (Nov. 2019):
Caldwell Partners has more than doubled in size and has new Board leadership

Author’s ownership disclosure: Yes - XX, STC, CWL


Read Disclaimer:

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 Avante Logixx Inc., Sangoma Technologies Corp. and Caldwell Partners International Inc. nor has it received any compensation from Avante Logixx Inc., Sangoma Technologies Corp. and Caldwell Partners International Inc. for the preparation or distribution of this article.

The author of this article has acquired and may trade shares of Avante Logixx Inc., Sangoma Technologies Corp. and Caldwell Partners International Inc. through open market transactions and for investment purposes only.

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Hi Gerry, Your philosophy is focused on principles that have been shown to produce above average results over time and your record has clearly proven that. Congratulations on a great blog and thank you for the hard work that you do in sharing and updating your ideas; it is much appreciated.