Open Text (OTEX.TO)

He is looking at the name more closely. It is on the leading edge of technology and cloud. He likes it. Doesn’t look too expensive.

It is not very expensive on a valuation. They are still growing through acquisition. Is probably quite safe at these levels.

Technology is one of the really good areas. These guys are always good at acquisitions. They spent a lot of time on organic growth in the last year. They have a fantastic balance sheet. These guys are always takeout candidates. (Analysts’ target: $57.54).

(A Top Pick August 21/17, Up 15%) Had been trading at a low multiple. Probably will pay down debt and get ready for the next acquisition. He has a small position.

Tech sector down in the US from its June peak and that translate into some Canadian companies in the sector like this one. They are due for another acquisition in his opinion. They are taking a new approach now with the new CEO focusing on return on invested capital. Very good long-term capital allocator. (Analysts’ price target is $57.00)

It reminds him of Constellation Software. OTEX-T has a long track record of making acquisitions accretive. What has changed is the organic growth side of the business picking up. They have low debt, also.

(A Top Pick September 27, 2017. Up 27%). This was out of favour when he bought it. It was down because it grows by acquisition. It bit off a couple of big acquisitions and the market was unsure how well it could manage them. As it turned out, they did well.

Likes it, but their financials are noisy after a recent purchase. Their chart has been bouncing around, but he sees this as an opportunity. Managers have increased shareholder value in recent years. He continues these managers to continue to execute well through organic growth and acquisition.

He is a happy shareholder of this one. He bought it because it had lagged the whole software cycle in the beginning. They made an acquisition that caused the stock to tumble – they saw that as an opportunity at $40. He would not be adding to his position at this value, but expects future valuation appreciation.

This has been a continuous grower and the business has been solid for the past few years. This is a stock that will let you sleep well at night.

They have been acquisitive but have not made a large one recently. The discount to the group could close over time.