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Investors seeking technology plays might want to stay home. While the U.S. market beckons with such heavyweights as Apple, Netflix and Facebook, smaller Canadian peers fly under the radar. Some are newly listed stocks waiting to be discovered by analysts, while others are forgotten names earning a new lease on life.

Tech stocks can help diversify away from the commodity and financial sectors that dominate Canada's domestic market, while the recent market pullback makes them even better bargains. We asked four portfolio managers for their top picks in tech land.

Slyce Inc.

  • Wednesday’s close: 75 cents a share
  • 52-week trading range: 42 to 84 cents a share since going public

Shares of this provider of imaging technology, which allows smartphone users to buy a product moments after photographing it, should climb higher as it partners with more big-name retailers, says Steven Palmer of Toronto-based AlphaNorth Asset Management.

U.S. luxury fashion retailer Neiman Marcus Group Ltd. and Tilly's Inc., a U.S. specialty apparel retailer targeting teens and young adults, agreed last month to be in Slyce's database. Slyce is not making money yet, but it will earn revenue from retailers that sign on and from per-search fees.

"[Slyce] will turn a lot of heads once they sign up all these major brands" in the coming months, said Mr. Palmer, who holds the stock in his AlphaNorth Partners hedge fund. "I think the U.S. investment banks will be all over them, and will end up financing this company on the Nasdaq."

Shares of the company, which went public at 60 cents a share in July, could rise well over a dollar in a year, he suggested. The big risk is that a rival firm could come out with competing technology, but Slyce "seems to have the head start in addition to having a strong management team and enough cash to move forward aggressively," he added.

Mitel Networks Corp.

  • Wednesday’s close: $10.17 a share
  • 52-week trading range: $5.79 to $13 a share

Mitel is an old technology name that has transitioned into a global business communications player, but its shares still remain a bargain, says Frank Mersch of Toronto-based Front Street Capital.

"It's a cheap stock [with a single, forward price-to-earnings multiple], and is not well known, with one or two analysts covering it." Mitel, which makes business phones and is focused on unified communications, recently acquired Aastra Technologies Ltd., making it the fifth largest in the world with more than $1-billion (U.S.) in sales, and No. 1 in Western Europe.

Cost-cutting to the tune of $30-million from the merger should help next year's bottom line. Mitel is also a way to play a European economic rebound, said Mr. Mersch, who owns the stock in his Front Street Global Opportunities fund. Mitel could also grow larger if it succeeds with its hostile bid for U.S.-based ShoreTel Inc.

After going public in 2010 at $14 a share on Nasdaq, its stock stumbled. Richard McBee, its chief executive officer since 2011, has "done a great job" in turning around Mitel and trying to build its cloud communications business, he added. Slower global growth is a risk, but "I can see the stock doubling over the next couple of years," he said.

Absolute Software Corp.

  • Wednesday’s close: $6.88 a share (Canadian)
  • 52-week trading range: $5.85 to $7.78 a share

Shares of this company, a seller of security software for laptops and other mobile devices, are poised to rise under new leadership and business strategy, says David Barr of Vancouver-based PenderFund Capital Management. Absolute works with equipment manufacturers to have its software installed on laptops so they are traceable if stolen.

Over the coming years, the big opportunity is in tablets and smartphones as government and corporations become more sensitive to data security, said Mr. Barr, who owns the stock in his Pender Small Cap Opportunities fund.

Shares of Absolute, which pays a small dividend, have traded in a split-adjusted $4 to $7 range since 2009. The company "probably had a few missteps on its sales and marketing execution," he said.

With activist investor Crescendo Partners on its board and the recent hiring of industry veteran Geoff Haydon as its new chief executive officer, "There is an opportunity for increasing revenue [beyond its 10- to 15-per-cent annual growth rate] and increasing bottom-line margins," Mr. Barr added. "We could see a $10 to $12 stock in the next six months."

The big risk is disruptive technology from a rival, but "we keep our ears to the ground on that," he said.

Zecotek Photonics Inc.

  • Wednesday’s close: 34 cents a share
  • 52-week trading range: 31 to 97 cents a share

Shares of this photonics technology company are speculative, but certain catalysts could light a fire under its stock, says Robert McWhirter of Toronto-based Selective Asset Management.

Zecotek, which is not profitable yet, focuses on imaging, lasers and three-dimensional display systems. It has developed high-performance crystals used in PET medical scanners and received orders from Japan-based Hamamatsu Photonics.

Zecotek has also launched a patent infringement lawsuit related to the crystals against Saint-Gobain Corp. and Koninklijke Philips Electronics NV. The case goes to trial in April, and Zecotek could win a significant damage award, said Mr. McWhirter, who owns its stock.

The company could also get a huge order for crystals from Geneva-based CERN, a major research project focused on high-energy physics. It will test the crystals early next year.

A Russian computer company, meanwhile, has struck a $7-million (U.S.) deal for a 20-per-cent stake in Zecotek's 3-D display systems subsidiary. That means this unit alone should be worth $35-million, and yet Zecotek's current market value is about $34-million (Canadian).

"You get a whole bunch of other value, such as from the crystals, for free," Mr. McWhirter said.

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