www.smallcappower.com/posts/article-4-canadian-small-cap-tech-stocks-29-8-2014

4 CANADIAN SMALL CAP TECH STOCKS THAT COULD BE TAKEOVER TARGETS

29 Aug, 2014

Despite its reputation as a resource-based economy, Canada has produced companies that have made meaningful contributions in the field of technology. The following four names are just some of the success stories that have made these firms attractive takeover candidates.

"Hewers of wood and drawers water"has long been a less-than-flattering way of describing Canada’s dependence on natural resources to drive its economic growth. While much of that still holds true today, Canada’s technological contributions should not be overlooked.

For example, BlackBerry Limited (TSX: BB), arguably, changed the way the world communicates via mobile devices. Meanwhile, other Canadian companiesare currently creating meaningful advances for both business and consumers alike. The following names are just some of the success stories that have made thesefirms attractive takeover candidates:

Avigilon Corporation (TSX: AVO): The company produces high-definition cameras for video surveillance and security. About half its revenue comes from the United States, while one-fifth comes from emerging markets, and that number is growing quickly. Sales in both the U.K. and Latin America nearly doubled from 2012 to 2013.

Avigilon’srevenue has been growing at a compound annual growth rate of 100% since 2008. During its most recent quarter,the company reported record revenue of $65.2 million, an increase of 66% over Q2 2013.

Alexander Fernandes, the company’s founder, president, CEO and chairman, owns just a little more than 10% of the company. Avigilon was a top pick of Robert McWhirter, President and Portfolio Manager at Selective Asset Management Inc., in SmallCapPower interview from December 2013 (Watch the interview here).

POET Technologies Inc. (TSXV: PTK): The company is developing its next-generation Gallium Arsenide semiconductor device technology called Planar Opto-Electronic Technology (POET). This platform would allow for the integration of optics and electronics on a single chip and the company claims it can achieve performance improvements that have not been possible in the semiconductor world to date, boosting performance by up to 100 times faster and consume up to 95% less power than existing silicon.

Interestedparties could include some of the biggest names in the industry, such as IBM, Google, and Intel.

Institutions own a significant percentage of POET’s common stock. For example, as of July 7, 2014, Pinetree Capital’s Shelton Inwentash owned about 12% of the company’s issued and outstanding common shares. Read more about POET Technologies here >>

FLYHT Aerospace Solutions Ltd. (TSXV: FLY): Let’s face it – 2014 so far has not been a great year for travelling by air, especially if your company was headquartered in Malaysia. FLYHT’s Automated Flight Information Reporting System, or AFIRS, provides functions such as voice and text messaging through satellites, data collection and transmission, and on-demand streaming of a flight recorder’s ‘black box’ data.

The company’s innovation makes it possible for live flight data to be streamed from an aircraft in real time. So if an airplane encounters an emergency, vital data that is normally secured in the black box, as well as position information, will automatically be sent to designated sites on the ground.

Industry changes could be in the works following Flight MH370’s disappearance in the spring as well as the Air France crash off the coast of Brazil in 2009, which might make it mandatory for all passenger planes to have a system installed such as the one offered by FLYHT. Roadmap Capital out of Toronto is one of the largest shareholdersof FLYHT with an 11% stake in the company. Read more about FLYHT Aerospace here >>

GuestLogix Inc. (TSX: GXI): If you’ve travelled by plane during the past few years you were likely told by one of the flight crew that you can’t pay cash anymore for inflight beverages and duty free. And chances are that the mobile payment machine they shoved in your face was a product of GuestLogix.
During the company’s most recent quarter (Q2’14), its recurring revenue increased 14% quarter over quarter.

Meanwhile, GuestLogix’s share price has tripled during the past two years. Money manager Kabouter Management of out Chicago owns about 12% of the company, while Toronto’s1832 Asset Management has a little more than a 10% stake. GuestLogix is one of SmallCapPower.com’s Expert & Analyst Top 20 Stock Picks (listed here).

These four companies represent just a few Canadian success stories that could be on the radars of larger firms looking to boost their product offerings. Please continue to follow Small Cap Power as we provide additional coverage of companies that could be acquired.