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.
predictions for 2021:
Ideas stock that will scale-up in size once again:
Top Pick #1 - Sangoma Technologies (TSXV: STC- C$3.60)
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
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
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.
Investorfile blog post (Dec. 2020):
should see its stock price run past $3.00, for over 135% upside
Ideas stock price that will have a rebound year:
Top Pick #3 - Caldwell
Partners International (TSX: CWL - C$0.90)
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.
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.
Investorfile blog post (Nov. 2019):
Partners has more than doubled in size and has new Board leadership
ownership disclosure: Yes - XX, STC, CWL
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.