For the month of February, the TSX Index was down 2.63%; for the 30-day period that ended March 3^rd, the Index was down 0.85%, reflecting a rally of 1.78% in the first 3 days of March. For the YTD it was up 4.2% and for 52 weeks was down 3.7%. While there have been some large swings in the interim, the index is not much changed over the past year from its present level. The market continues to wait for the resolution of the battle between the inflation hawks and doves. The hawks worry about persistent inflation and BOC responses; the inverted yield curve; ongoing war in Ukraine. The Doves point to continued growth (if decelerating) in both GNP and Retail Sales; strong employment and declining inflation and assume China’s reawakening to be positive.

With this background, the following table presents the top and bottom performers in the 30-day period ending March 3^rd, 2023.

Well Health

The top performer for the period was Well Health Technologies Inc  (WELL) whose stock was up 23.4% in the period, 63% YTD, and 8.9% over the last year. The stock fell from a high of $5.01 on March 28, 2022, to a low of $2.68 on December 19, 2022, and has risen steadily since. WELL is a company focused on positively impacting health outcomes by leveraging technology to empower healthcare providers and their patients globally. Ontario’s announced intention (early February) to reduce wait times may have been the proximate catalyst for the recent increase in the stock price. WELL is the largest single license holder and service provider in Ontario through My Health Partners: Its technology could be used to provide diagnostics, reduce intake procedures and thus reduce wait times all supported by OHIP. Moreover, this treatment might be extended to other provinces.

Results for the third quarter that ended September 30, 2022, were positive: Revenues at $145.8 million were up 47% over the corresponding prior year period; adjusted EBITDA at $27.5 million was up 23.3%; reported net income was $0.6 million although WELL shareholder share was negative $4.4 million, an improvement of 63.5%. $11.4 million of free cash flow was generated for WELL shareholders in the quarter. Management was positive about the outlook.

Topicus.Com Inc

The 2^nd best performer for the period was Topicus.Com Inc (TOI) whose stock was up 19.3% in the period, 26.25% YTD, and 7.85 for one year. TOI was formed by Constellation Software (CSI) giving off the assets of its Netherlands subsidiary to TOI and then dividing some 39 million of its shares among CSI shareholders. TOI is controlled by CSI through its ownership of 1 super-voting share (gives it 50.1% of aggregate voting shares outstanding). The role of TOI is to acquire, manage and build vertical market software businesses which provide mission-critical and high-impact solutions to customers primarily in Europe. Revenues consist primarily of software license fees, maintenance and other recurring fees, professional service fees, and hardware sales.

For the quarter that ended December 31, 2022, Revenue at 263.73 euros was up 27% (primarily due to acquisitions) over the same period one year ago; net income at 28.7 euros was up 6%. There is a substantial non-controlling interest in TOI such that net income for equity shareholders amounted to 17.0 euros which was up 41%; free cash flow available to shareholders at 18.6 euros was down 10%. Essentially, TOI is a subsidiary of CSI which is a large and successful software provider. TOI seems to be progressing satisfactorily.

Stantec Inc

The 3^rd best performer was Stantec Inc (STN) whose stock was up 12.11% in the period; 23.03% YTD and 28.54% for one year. It is a global design and delivery leader in sustainable engineering, architectural planning, and environmental services with designers, engineers, scientists, and project managers, innovating together at the intersection of community, creativity, and client relationships. It unites more than 26,000 employees working in over 400 locations across six continents. STN’s stock has risen satisfactorily over the year, but the proximate cause of the recent lift was the announcement on February 7^th that it was named the prime consultant on the $25 billion net zero World Logistic Center. The 4-square-mile site in California will house the largest net-zero logistics development in North America and is projected to take 7 years to complete.

On February 22, 2023, strong results for the year ended December 31, 2022, were announced: net revenue at $4.46 billion was up 22.6% over the prior year; Net income at $247 million ($2.22 per diluted share) was up 23% and adjusted EBITDA at $723.9 million was up 26%. Management remains very optimistic that a strong multi-year cycle is ahead. In the US, significant federal funding is starting to be dispersed from a variety of Federal Acts such as the Infrastructure Investment and Jobs Act (IIJA).

Sylogist Ltd

The third-worst performer was Sylogist Ltd (SYZ) whose stock was down 17.75% for the period; 8.4% YTD and 40.6% for the year. SYZ is a customer-focused Software-as-a-Service (“SaaS”) technology innovation company that provides cloud-based software solutions to a wide range of public sector enterprises, primarily in North America. It provides comprehensive, mission-critical, enterprise resource planning (“ERP”) and constituent relationship management (“CRM”) solutions, to over 2,000 public sector customers globally across the government, nonprofit, and education verticals.

SYZ is guided by the “Rule of 40”, meaning there is a long-run expected combined blend of organic revenue growth rate and Adjusted EBITDA Margin greater than 40. The latest reported results for the fiscal year that ended September 30, 2022, were announced on November 14th. Revenues at $14.2 million were up 32% over the prior comparable period; gross profit margin was down almost 12 percentage points; profit before income tax at $611,000 was down 68%. Closing cash on hand was $19.4 million and $4.5 million was used on December 20^th to reduce debt. SYZ announced at that time it was revising its capital allocation strategy and reduced its dividend from $0.50 to $0.01 per quarter. Two significant private investments in December diluted existing shareholders.

Absolute Software

The 2^nd worst performer was Absolute Software Corp whose stock declined 26.3% in the period; 17.54% YTD but grew 5.1% over the past year. It was ranked 2^nd best in August 2022 and September when it grew significantly, and worst in November when it fell back. It appears that the announcement on February 14, 2023, of the 2^nd  quarter results for the period ended December 31, 2022, provoked the recent precipitous decline.  While revenue at  $57.2 million was up 17% over the comparable prior period, the net loss grew 37% to  $7.0 million. Cash on hand on December 31, 2022, was $49.5 million, long-term debt was $258.6 million and shareholder equity was negative.

ABST is a leading provider of self-healing endpoint and secure access solutions delivering truly resilient Zero Trust for today’s distributed workforces. This involves the only undeletable defense platform embedded in more than 600,000 devices, which helps some 20,000 customers protect against the escalating threat of ransomware and malicious attacks. One of the key metrics that management relies on is, annualized recurring revenue (ARR). For the recent quarter, ARR was up 15% to $225 million.

Enthusiast Gaming

The worst performer was Enthusiast Gaming Holdings Inc (EGLX) (an integrated gaming entertainment company)  whose stock was down 27.78% for the period, up 22.97% YTD, but down 73.31% for the past year. This stock has been on a roller coaster for the past year: it was the number 1 performer in May and November; 2^nd worst in September and October and the worst in December 2022. EGLX is building the largest media platform for video game and esports fans to connect and engage with its approximately 300 million gaming enthusiasts worldwide. It peaked on February 15, 2022, at $4.67 and has fallen gradually to $0.79 on January 9^th, 2023.

The results for the 3 month period that ended September 30, 2022 (Reported in mid-November) perhaps gave the stock a nudge, but with no significant announcements, the price drifted off in December, rising through January to a near-term high of $1.35, only to fall back in February to close at $0.91. Nasdaq put EGLX on notice that it would be delisted if the stock price did not get above $1.00 within the next 180 days. Finally, a new CEO was announced on March 1^st with the ex-CEO becoming Chairman.

These are just some of the more than 60 Canadian companies we cover at 5i Research. To view their recent reports you can search for their tickers in the Reports section. If you are not a member and would like to gain access to these reports as well as the Q&A service where you can ask and search questions on these companies, you can fill in your information below to sign up for a free trial.

Take Care,

Disclosure: The analyst(s) responsible for this report do not have a financial or other interest in the securities mentioned.