Sector recovery: 50% increase for 2 technology stocks

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The TSX technology sector is up 3.01% and 1.37% over the past 30 and five days. The sector remains the worst performer since the beginning of the year (-19.37%), although it was one of the best performers when the index hit its new all-time high. However, the recovery may take longer as the rout is expected to continue throughout the year.

However, not all voters will reach the bottom. Looking at market analysts’ price predictions, Nuvei (TSX: NVEI)(NASDAQ: NVEI) and quarter hill (TSX:QTRH) look ready to break out. Their potential increase could be 50% or more.

Superb revenue and volume growth

Nuvei carries a buy at high buy ratings from market analysts. The stock price today is $88.64, a gain of 34.8% since March 1, 2022. Year-to-date, the tech stock is up 8.1% . According to market analysts’ 12-month forecast, the potential return is between 25.7% (medium) and 73.6% (high).

The $12.8 billion global payments technology company fell out of favor with investors in 2021 due to an unfavorable report on short sellers. However, interest is returning after the impressive fourth quarter and full year 2021 financial results. in the fourth quarter of 2020. Net profit, however, fell 45.6% to $12.3 million.

For the full year, revenue and total volume increased 93% and 121% year-over-year. Nuvei’s net profit reached US$107 million compared to a net loss of US$103.7 million in 2020. Notably, free cash flow (US$290.1 ​​million) and cash flow from operating activities (US$266.9 million) recorded generous increases of 100% and 182%, respectively. .

Nuvei Chairman and CEO Philip Fayer said, “We have made tremendous progress investing in our flexible, scalable and modular technology platform to meet the rapidly changing global and local needs of our customers. With the addressable market increasing, Nuvei will focus on product innovation, growing with existing customers, attracting new customers, and acquisitions to drive the future of commerce.

According to Fayer, the revenue target for 2022 is between US$940 million and US$980 million, representing 30-35% year-over-year growth. For the adjusted EBITDA margin, the growth objective is 50% in the long term.

From enemies to partners

Quarterhill used to be dark but not anymore. Trading volume increased on March 22, 2022, following the announcement of a patent license agreement with Apple. The $260.78 million company operates in the Intelligent Transportation Systems (ITS) industry, an industry that many people are unfamiliar with.

In addition to providing tolling and enforcement solutions in the ITS industry, Quarterhill is a leader in intellectual property licensing. Its subsidiary, Wi-Lan, is a successful patent monetization company. He helps global partners with their clients to unlock IP values ​​through various patent monetization models.

Wi-Lan and its subsidiary, Polaris Innovations, are no longer opponents of Apple in an infringement case. After the parties reached agreement on a settlement and the dismissal of all pending litigation in Canada, Germany and the United States, a patent license agreement was signed.

Quarterhill is trading at just $2.35 per share – a good entry point. Market analysts are bullish and have a 12-month average price target of $3.42 (+45.5%). However, the high price target of $4.25 (+80.9%) is achievable with Apple’s licensing agreement.

Sector exceptions

Technology is not the best sector to invest your money in 2022. However, Nuvei and Quarterhill are exceptions for their favorable business prospects.