|RES Free Thinking Top 5 Canadian |
Tech Picks 2009
|Enter 2009||March 10 2009||Yesterday||FY Gain||Gain from TSX Lows|
By the time the year concludes, there will be well over 100 posts published on the blog with GXI topping the list at 15 articles. December has been a very busy month, so the posts have been few and far between. Expect 2010 picks and predictions to follow this post shortly.
Macro backdrop to picks
For many, the first quarter was a harrowing experience as the market plunged to its lowest levels since H2 2003, while suffering some of the greatest percentage losses since the 1930s. There was a lot of "end of world" prognosis from many market watchers. Free market "Ayn Randians" horrified themselves by orchestrating historical levels of government intervention first into the financial markets, and then into the general economy, to keep it from imploding. Despite ideology, they understood that, without adequate liquidity and stimulus, the interconnectedness among financial institutions and trade economies worldwide could have resulted in a financial armageddon that may have exceeded the economic destruction of the Great Depression. No government wanted the potential unrest that could have followed. Unprecedented global co-operation among central banks helped to ease the credit crisis, and create stimulus. And after a rocky start, initial skepticism finally gave way to "hope" as the Obama administration began to execute.
2009 Top Pick Criteria
With the macro-economic drama as a backdrop, it was actually relatively easy to pick stocks. The criteria was simple:
- solid balance sheets
- expanding gross earnings
- generating cash flow
- operating in protected high growth market niches.
- recurring revenue base.
The primary themes for the Top 5 picks were: mobility and transactions. I attempted to stay away from hardware.
Rock Star Stories Missed: Systems Xcellence (SXC); Dragonwave (DWI); WiLAN (WIN); Mosaid (MSD); Aastra (AAH)
Game-Changers of the Year: INTC goes all-in with Transgaming's GameTree.TV (TNG); Tata distributes Iseemedia's (IEE) ISeeMail in India.
Drama of the Year: Route1 (ROI) - you're fired! No YOU"RE fired! Boardroom drama.
Disappointment of the Year: Vendtek Systems (VSI) still not trading.
Themes, Concepts and Companies that Helped Shape the Year
Green Shoots - The world held its collective breath hoping that the early positive economic conditions would not shrivel.
Twitter - Not many start-ups can say they were integral to a political uprising (see Iran)
Stimulus - Economic pornography to some.
Mobile Applications - Pretty much all fun and games...unless you are a carrier.
Bailout - Has there ever been as much anger directed towards a profession?
10% unemployment - the sky fell and nothing happened.
Social Media - Is to 2009 what e-commerce was to 1999.
Apple (AAPL) - stellar year in the spotlight...but, alas, here comes Google (GOOG)
Cloud Computing - finally coming of age?
BRIC - In the future, will 2009 be regarded as the tipping point towards a new economic world order?
CleanTech - Has the industry finally hit its inflection point?
It is the opinion of many analysts that, in retrospect, stock picking during 2009 was fairly easy as the whole market was up 29% from the beginning of the year, and up 50% from the March trough. At the beginning of the year, it sure didn't feel that way.
Picking stocks for 2010 could be a whole lot harder because most believe that 2010 indices will likely show less dramatic growth than 2009, and may actually decline as macro conditions erode during H2 2010 related to US mortgage renewals, and monetary policy as government stimulus programs end. It is expected that 2010 will be a true stock pickers year.
Next post, RES Free Thinking Top Canadian Tech Picks 2010.