Canada’s Fastest Growing Tech Penny Stocks

Published: 02nd October 2010
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Some lists are worth being on. Some are not. If you’re a penny stock investor looking for companies with great upside potential, the Deloitte Fast 50 is one list you definitely want to check out.

Last week, Deloitte released its "Technology Fast 50", a ranking of Canada’s 50 fastest-growing technology companies. To qualify for the Deloitte Technology Fast 50 ranking, companies must have been in business for at least five years, have revenues of at least $5 million, be headquartered in Canada, own proprietary technology, and conduct research and development activities in Canada.

As you can imagine, most of the companies on the list are small. After all, it’s easier for a smaller company to experience 5,000% annual gains than it is a seasoned juggernaut. Granted, 5,000% growth isn’t entirely accurate.

The Deloitte Canada Technology Fast 50 winners experienced an average five-year revenue growth rate of 5,638% till 2010 – an all time high.

John Ruffolo, National Leader, Technology, Media & Telecommunications Industry Group, Deloitte says Canada’s tech companies set records for growth in 2010. "Both the top five companies and the entire Fast 50 roster were at all time highs for five-year growth at almost 43,000% and 5,600% respectively."

"Although this year’s winning companies are doing incredibly well, who knows how much bigger they would be today if they had had access to more growth capital in their formative years?"

Being fairly new companies, most are not publicly traded. In fact, of the top 15 companies, only three are publicly traded. Though fortunately, all three are penny stocks. While inclusion on the Fast 50 does not mean these penny stock companies are worth investing it, it does mean they are worth taking a look at.

After all, strong revenue growth tends to be a factor when looking for successful penny stock with strong upward potential. And if it isn’t a factor for you, it ought to be.

Coming in at #7, with 5 year revenue growth of 10,203% is Montreal based ProSep Inc. (PRP - TSX.T). PRP provides processing solutions to the oil and gas industry. On August 11, PRP announced that second quarter revenue slipped 7% year over year to $8.7 million. The company’s second quarter (loss) improved drastically to ($300,000).

While the economy saw the company’s Q2 revenue slip, management said that its backlog should significantly improve in the latter half of this year and into 2011. Over the last number of weeks PRP announced a $2 million contract with a client in Kuwait and the United States. The company also said it received new contracts in the United States, South America and Asia Pacific for a total of $2.4 million.

GuestLogix Inc (GXI – TSX) came in 9th spot with five-year revenue growth of 3531%. A provider of onboard store technology to the passenger travel industry, GXI reported record revenue in the second quarter. In mid-July, GXI said that Q2 revenue increased 39% year over year to $4.6 million. Net income for the period was up 66% at $0.05 million.

In early September, the company announced that Qantas Airways deployed the company's OnTouch Retail Technology. In July, it announced a contract with Frontier Airlines, a subsidiary of Republic Airways.

Solar technology provider ARISE Technologies (APV – TSX.T) ranked 11th in the Deloitte Fast 50 with five-year revenue growth of 2777%. On August 4, APV announced that Q2 revenue jumped more than 300% year over year to $15.3 million. Year to date revenue was up 127% at $31.4 million.

In late August, the company provided an update, "To this point in the third quarter, we have continued to see increased demand for our products and an ongoing improvement in the PV solar cell market," said Vern Heinrichs, President and CEO.

"The successful ramp up to full production on Line Two at our German plant marks the successful completion of Phase One of our PV cell manufacturing plan. We continue to add new customers and have begun preliminary planning for the eventual commission of Lines Three and Four."

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