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Investors looking to make money from the exploding growth in mobile and Internet usage should check out services provider Tucows Inc., a high-performing stock that analysts say has more room to run.

The Toronto-based company, which provides Internet domain services through brands such as Hover and YummyNames as well a network access services under the name Ting, has seen its shares soar 65 per cent over the past year on the Nasdaq. The shares have doubled on the Toronto Stock Exchange in the past 12 months.

Its legacy domain services division has been growing steadily, but analysts say the shares are being supercharged by the company's higher-margin Ting Mobile business in the United States, which has seen quarterly compound annual subscriber growth of 24 per cent over the past nearly three years. Ting Mobile aims to lure customers away from major carriers such as Verizon and AT&T by offering cheaper and more flexible packages.

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"Ting Mobile is the current growth engine of the company," said Cantor Fitzgerald analyst Scott Curtis, who recently initiated coverage of Tucows with a "buy" and $36 (U.S.) a share target price. That's more than 40 per cent above its current price, around $25 on the Nasdaq.

Mr. Curtis said the newer Ting Internet service, which is steadily being rolled out in small cities across the United States, could offer investors even greater returns longer term. Ting Internet provides gigabit-speed, fibre Internet access to consumers and businesses. It's now offered in two markets, Charlottesville, Va., and Westminster, Md., and Tucows plans to expand to five or six other U.S. markets next year.

"Ting Internet is the sexy growth opportunity," Mr. Curtis said.

While it's a new industry for Tucows management, which Mr. Curtis says is a risk, "we are comforted by their success with Ting Mobile, which is a testament to their ability to navigate and grow in uncharted territory."

Of the two analysts that actively cover Tucows, both have a "buy" recommendation. Cormark Securities analyst Hubert Mak has a $34 target, which he increased recently from $22 after the company reported strong second-quarter results that beat expectations.

"We like Tucows for its defensive quality coming from its market-leading Internet domain registrar business that provides it with a steady cash flow stream," Mr. Mak said in a note. "Further, we believe its new Ting business continues to show traction that is adding to its recurring revenue base."

Tucows chief executive Elliot Noss said the mobile business is where the greatest growth is, at least in the near term. There are more than 355 million wireless subscriber connections in the United States, which includes smartphones and tablets, according to industry statistics. As of June 30, Ting had 113,000 subscribers and 178,000 mobile devices under its management (some users have more than one device). That compares with 73,000 subscribers and 113,000 devices at the same time last year.

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"There is still a lot of runway in the mobile phone business," Mr. Noss said. "Underneath that we're building another nice growth asset [with Ting Internet]."

He describes Ting Internet as a "get rich slow and for a long time" business.

While the company has done well and is diversifying in the right direction, some portfolio managers still see it as too small or too expensive right now to add to their funds.

"It's a nice little business," said Darren Sissons, managing director at Portfolio Management Corp. "In the tech space you have to be clever and figure out where you need to go next."

Still, he said the company, with a $280-million market capitalization, is too small for his company that focuses mostly on large-cap stocks.

Stephen Takacsy, chief investment officer and portfolio manager at Lester Asset Management, said Tucows is generating good cash flow from its domain businesses but sees the new higher-growth Ting divisions as more risky and requiring more money for expansion.

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"The stock is ridiculously expensive," Mr. Takacsy said. Tucows is trading at 17 times forward earnings, which is above many of its peers in both the mobile and domain services sectors.

"We are much more value driven. The Internet market isn't somewhere we're looking for investments, but they might do very well," Mr. Takacsy said.

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