Category Archives: Growth Investing

Should You Buy Open Text Corp. for High Dividend Growth?

This first appeared as 1 of 3 top US dividend ideas for September 2017 in the Seeking Alpha Marketplace service DGI Across North America.

Open Text Corp. (TSX:OTEX)(NASDAQ:OTEX) is a mid-cap technology company, which has been growing by acquisitions in the expanding industry of enterprise information management. It is a global leader that offers software applications and cloud services in managing data.

Open Text strong long-term total returns

Source: August presentation (pdf)

Shares Experienced a Meaningful Dip

The stock has dipped about 15% on the Toronto Stock Exchange since April. This is partially because of a stronger Canadian dollar against the USD, as the company reports in USD. So, interested Canadian investors should take advantage of a stronger loonie and pick up some shares for technology exposure.

For U.S. or Canadian investors, the stock offers above-average growth (and dividend growth) at a low multiple. At ~US$32.30, it trades at a multiple of roughly 15 and a forward multiple of roughly 13, which is attractive for the analyst consensus’s estimated 3-5 year earnings per share growth rate of 19.7% for the company.

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Should You Buy Shopify Today?

Growth stocks shouldn’t be taken lightly. Just look at the Shopify Inc. [TSX:SHOP](NYSE:SHOP) stock to get an idea of what I mean. It has more than tripled in the last 12 months. You can’t argue against Shopify’s outperformance, except that it hasn’t turned a profit – yet. The company is expected to start making a profit as soon as late this year.

Shopping today is different from shopping 10 years ago. Nowadays, merchants may sell their products through their online store, their physical stores, marketplaces, social media, mobile apps, and other sales channels.

Shopify “provides (merchants) with a single view of their business and customers across all of their sales channels and enables them to manage products and inventory, process orders and payments, ship orders, build customer relationships, and leverage analytics and reporting from one integrated back office”. – 2016 annual report (pdf)

Rapid growth

Shopify’s growth strategies focus on growing its merchant base. At the end of 2016, Shopify had more than 377,500 merchants from roughly 175 countries using its platform with a strong focus in the United States. This suggests there’s much room for potential international growth in the future.

From 2013 to 2016, Shopify grew its revenue at a compound annual growth rate of 98%. This year, management expects to grow its revenue by 49-54% to $580-600 million.

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Celgene: A Growth Stock You Don’t Wanna Miss

Despite having appreciated 20% in a year, Celgene Corporation (NASDAQ:CELG) shares are still a reasonable buy for growth.

What does Celgene do?

Celgene is a biopharmaceutical company focused on the discovery, development and commercialization of innovative therapies for patients with cancer, immune-inflammatory, and other unmet medical needs. The company operates in more than 60 countries and sells its products in more than 70.

In 2016, Celgene generated sales of $11.2 billion. Its expertise lies in hematology, oncology, and immunology. Here’s an overview of Celgene’s key products:

Product 2016 Sales (million) % of 2015 Sales % of 2016 Sales YOY growth
Revlimid $6,974 63% 62% +20%
Pomalyst/Imnovid $1,311 11% 11.7% +33%
Otezla $1,017 5% 9% +116%
Abraxane $973 10% 8.7% +1%
91.4%

Revlimid remains as Celgene’s core drug from 2015 and its market in the multiple myeloma space is still growing.

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