Besides offering useful products and services, it’s the difference between a company’s intrinsic value and its stock price that determines your ultimate return. This is especially true with tech stocks, which often rely on exciting growth stories to attract investors well before profitability can be achieved.
The difficulty in determining a company’s intrinsic value is entrenched in investing lore, with one camp favouring discounted cash flow models and their precise, but incredibly input-sensitive results, while another camp relies on fundamental analysis outside of the balance sheet to come to an allocation decision.
Whichever side(s) you chose, the important thing to remember is that intrinsic value is an estimate, meaning that it should include a sufficient margin of safety between it and a stock’s trading price before you buy shares. Some investors require that margin to be 25 per cent, others 50, but the answer is ultimately up to you.
A useful way to source these discounted companies is to find stocks with significant catalysts for growth whose share prices have yet to reflect them. The longer the lag in the stock – supposing impressive business operations, with strong reasons for continued optimism – the greater your chances at outsized returns.
We’ve identified this delayed effect in three micro-cap tech stocks that released value-added updates over the past week. Each stock is relatively flat over the past five years, despite the underlying companies’ innovations gaining market share at an exponential pace.
Let’s explore what makes each company unique and why they might deserve a place in your portfolio.
Datametrex officially launches AnalyticsGPT
Datametrex (TSXV:DM) offers technology solutions in artificial intelligence (AI), machine learning, healthcare and electric vehicles.
In healthcare, the company operates Medi-Call, a subscription service for primary medical care that reported a 10 per cent increase in subscribers in Q2 2023, and Imagine Health, a multidisciplinary medical centre network in Edmonton with active expansion in Vancouver.
In the electric vehicle space, Datametrex provides charging stations and services in Ontario and British Columbia, with planned expansion across Canada.
CEO Marshall Gunter spoke with our Brieanna McCutcheon about AI subsidiary Nexalogy Environics’ launch of Analytics GPT, Datametrex’s AI and generative pre-trained technology (GPT) software for businesses to distill complex data sets into actionable insights.
Gunter believes AnalyticsGPT, which was developed alongside the Canadian and U.S. militaries, “will revolutionize the way organizations harness the potential of AI for their business and discovery needs,” according to a statement released Sept. 18.
With revenue up by approximately 15 times from 2018 to 2022, gross profitability up by 10 times, and strong tailwinds in AI, telehealth and electric vehicles expected through this decade, Datametrex looks incredibly cheap at is current price of $0.065 per share, which is up by only 8.33 per cent over the past five years.
Nextech3D.ai establishes Nextech3D Solutions India Private Ltd. to scale 3D model production amid record demand
Nextech3D.ai (CSE:NTAR) is a diversified augmented reality and AI technology company known for creating 3D models for Amazon, Procter & Gamble, Kohl’s and other major e-commerce retailers. Its in-house brands include:
- Toggle3D.ai, a web-based design studio for creating, customizing and publishing in 3D
- ARitize3D, a leading integration platform for personalized AI-generated 3D models and AR experiences
- ARway.ai (CSE:ARWY), an augmented reality indoor navigation platform
- Map D, an all-in-one virtual event-building service
Q2 2023 saw Nextech rake in record revenue of $1.4 million, up by more than 155 per cent from Q2 2022, with Q3 revenue projected at another record of $1.7 million thanks to increased order flow. This is on the back of more than 50,000 3D models delivered to date and the company’s lowest cash burn in years, granting it a cash runway for at least the next 12 months.
CEO Evan Gappelberg believes Nextech is positioned to be “a leading AI solution globally for scaling 3D model production,” according to a statement released on Aug. 22.
In September, he spoke with Brieanna McCutcheon about Nextech’s latest move in this direction with the founding of Nextech3D Solutions India Private Ltd., marking the company’s transition into high-scale 3D model production. The move is expected to “generate significant additional cash flow by optimizing production processes and taking advantage of cost-effective resources in the region” as soon as Q4 2023, according to the accompanying news release.
When we compare this operational momentum with NTAR shares’ 10 per cent gain since inception, including a 64.74 per cent loss over the past year, it’s hard to argue that the market is fully acknowledging the value the company brings to the table.
INEO Tech increases media revenue potential with key existing customers
INEO Tech (TSXV:INEO) is a digital retail advertising company offering its Welcoming System, a suite of patented digital and static displays that combine advertising, customer analytics and loss-prevention capabilities.
The Welcoming System allows for the monetization of store entrances, which are usually limited to security solutions, enabling INEO to occupy a differentiated position while capitalizing on forecasted tailwinds in loss prevention and global digital retail media ad spending through this decade.
The company is putting all the pieces together to increase revenue – which grew by 74 per cent YoY in fiscal Q1 2023, 50 per cent in fiscal Q2 2023 and 19 per cent in fiscal Q3 2023 – by accelerating and enhancing product deployments with existing customers, as well as securing trials with major retailers to convert into firm orders.
Momentum was recently catalyzed by updated contracts with national retail and regional liquor-store locations that allow for the third-party sale of advertising rights, which INEO expects to grow revenue and improve margins.
The growth stock currently has 108 locations outfitted across 22 U.S. states, and more than 130 locations in Canada, with thousands more in an active pipeline worth around C$40 million that includes five major U.S. retailers.
With shares down by 87 per cent from their all-time high, and INEO brimming with promise backed by tangible evidence, how could the stock be anything but a no-brainer of a buy?
Join the discussion: Find out what everybody’s saying about these Canadian tech stocks on the Datametrex, Nextech3D.ai and INEO Tech Bullboards, and check out Stockhouse’s stock forums and message boards.
This is sponsored content issued on behalf of Datametrex, Nextech3D.ai and INEO Tech, please see full disclaimer here.