Though Canada isn’t typically identified for its tech shares, it has fostered some giants by way of the years. Shopify (TSX:SHOP) is certainly one of Canada’s best-known success tales. With a market cap of $286 billion and trailing enterprise value-to-sales ratio of 19, its development story is already broadly and loudly identified.
There isn’t a doubt it has created an unbelievable e-commerce ecosystem that may compete with the most effective (like Amazon.com). Nonetheless, in lots of respects, it’s already a world chief. The e-commerce platform might be within the fourth or fifth inning of its development story. There are nonetheless extra legs for it to broaden, however its development is widely known with a premium valuation.
VitalHub: A Canadian small cap tech inventory with ample room for development
If you wish to discover the following world chief, you’ll want to search for small or mid-cap shares which can be nonetheless early of their development trajectory. One Canadian tech inventory that appears fascinating is VitalHub (TSX:VHI). This small-cap inventory has a market cap of $623 million and trades for $9.93 per share at this time.
VitalHub supplies specialised software program catered to the healthcare trade. Its focus is on digital well being data (HER) administration, case administration, communication, and cell options. Nonetheless, it concentrates on area of interest service areas like social providers, psychological help providers, neighborhood help, and outpatient help.
This give attention to niches helps it keep away from competitors with the large EHR suppliers like Oracle and Epic. It doesn’t function within the very aggressive U.S. market and primarily works in areas with public well being providers (like Canada, the U.Okay., and Australia).
A key to its development has been making good acquisitions. It has remodeled 20 acquisitions over the previous a number of years. These acquisitions both broaden it by way of scale, present new merchandise that it could promote throughout its portfolio, or enlarge its presence geographically.
To date, this tech inventory has accomplished a superb job incorporating acquisitions into its fold. It has a improvement centre in Sri Lanka that helps it cost-efficiently enhance and combine the software program it acquires. This can be a main aggressive edge that helps higher margins.
This tech inventory has delivered and will maintain doing so forward
VitalHub has delivered nice outcomes for shareholders. Whereas its inventory is down 9% this 12 months, it’s up 235% over the previous 5 years. In that point, revenues have grown by a 51% compounded annual development charge (CAGR). Earnings earlier than curiosity, tax, depreciation, and amortization (EBITDA) have risen by a 77% CAGR.
After a few fairness raises, VitalHub is sitting with over $100 million of money to deploy. It’s in a stable place to proceed rising by way of acquisition.
The Silly takeaway
VitalHub might by no means hit a market cap of $286 billion like Shopify. Nonetheless, if it could well deploy its capital at elevated charges of return and proceed to broaden its market share, it’s nonetheless doable for its inventory value to extend a number of occasions over. It already has a world presence however give it time and this Canadian tech inventory might turn out to be a world chief in area of interest healthcare software program.
