Revenue (2019) - $133 million
Profit (2019) - $19.4 million
Three-year share price gain - 22%
P/E ratio (trailing) - 18.2
Fast-rising young tech stocks scare the bejesus out of value investors, and 2020 was filled with them. Shopify roared past Royal Bank of Canada to become the country’s most valuable publicly traded company, and recent IPOs such as Lightspeed, Docebo and Dye & Durham soared to multibillion-dollar market capitalizations despite little or no earnings.
For a tech play that’s a lot less stressful, look to placid Regina and Information Services Corp. (ISC), a long-established company that has an intriguing mix of strong fundamentals. Those include government and private-sector clients, digital technology applied to solid traditional businesses, and a track record of steady earnings and stable growth.
ISC is a former provincial Crown corporation that operates the electronic databases for Saskatchewan’s land titles, business registrations and records of personal property (such as autos). The province took the company public in 2013 but retained a 31% stake. Jeff Stusek, a University of Regina MBA graduate who arrived as chief operating officer in 2006 and was promoted to CEO in 2008, said the idea behind the share issue was to “unleash this company to the world.”
Revenue was $79 million to start, all from the province, courtesy of a 20-year exclusive contract to run its databases until 2033. But leaders wanted to diversify outside Saskatchewan and add revenue from private-sector sources, which now accounts for about half.
The company has done that by becoming a mini tech roll-up. In 2015, it bought Toronto-based ESC Corporate Services, which provides registry information to law firms and banks. Two years later, ISC added Enterprise Registry Solutions of Dublin and B.C.-based AVS Systems Inc., which offers technology automation services to lending and leasing businesses. Last July, ISC acquired Paragon Inc. of Toronto, which sells systems and services that help banks and other lenders recover cars, boats and other assets (the repo business in the new millennium).
“That turned some new eyes to our story,” says Stusek, who’s 51. “What was boring becomes exciting.” Until that purchase, ISC’s stock has for years hovered just above its issue price of $14 for years and then sank below that mark last May in the COVID-19 market plunge. But since the summer, ISC has climbed past $20.
Even so, the excitement still seems limited. Growth will likely remain prudent. ISC operates mostly in niche markets. Its closest competitor is Toronto’s Ontario Municipal Employees Retirement System–owned Teranet, another mid-sized provider that grew out of a registry operation. But that focus keeps the business below the radar of tech giants.
And with ISC still priced at less than 20 times its trailing earnings per share, it provides a stress-free option for both growth and value investors. “I think we’re in the sweet spot of both,” Stusek says.
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