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Would CGI Inc be a good pickup today?

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Asked on September 8, 2020 11:39 am
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Hi there,

CGI has been one of the most reliable tech companies in Canada for the past decade (and more). This is not a high-flying tech stock, but a stable and reliable technology stock that typically doubles in size every 5-7 years. It has a two pronged approach to growth - organic and acquisitions. The company has a history of making transformative acquisitions every handful of year.

The company generates strong cash flow and is currently sitting on a backlog of $22.30 million which is 1.8x annual revenue. It is one of the most diversified tech companies in the country with operations worldwide and several vertical markets - 35% of revenue of which is generated from Government contracts. Trading at only 17 times forward earnings, CGI also looks attractive at these levels. Don't expect anything flashy like a SHOP or LSPD, but you can expect consistent and reliable outperformance in comparison to the broader markets. It will also likely outpeform the tech industry if there is a big correction in Tech as it is not trading at some of these sky high valuations.

Of note I own the company and am considering averaging up at these levels.

Mat

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Posted by Mathieu Litalien
Answered on September 9, 2020 4:49 am