Move Over BlackBerry: This Stock Could Be a Much Bigger Long-Term Winner

·4 min read
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Safety. It’s the one thing we want when using the internet. And these days, we use the internet for just about everything. It holds our credit card information, our social insurance numbers, our addresses, and more. So it could be quite scary to think someone could hack into it and take all that away from us.

But that’s why digital forensics has become the next big area of investment for those seeking returns at Motley Fool Canada. An analyst study recently made a list of stocks that investors should look at when considering digital forensics. Although BlackBerry (TSX:BB)(NYSE:BB) is in the cybersecurity area, it did not make that list.

So which stock did? First, let’s look at why you want to invest in this industry.

What exactly is digital forensics and why should you care?

As I eluded to above, we should all care about digital forensics because it protects our data. Not only does digital forensics offer a way to recover items found on digital services, but it also investigates to identify criminal or hacking activity. These are crucial areas of information security, yet we are continuing to see major issues in the last few years.

The Canada Revenue Agency had multiple incidents of hacking. FAANG members have practically all been targeted. Yet most companies — and indeed governments — don’t have the skilled IT staff that could handle such an attack.

When analysts created a list of companies to consider using for cybersecurity, there was one Canadian company that stood out. It wasn’t BlackBerry stock, but another Motley Fool Canada favourite: OpenText (TSX:OTEX)(NASDAQ:OTEX).

OpenText stock: A rare case of long-term returns

First, let me explain why OpenText is a good investment within this digital forensic industry above BlackBerry stock. The company provides a suite of software products and services, managing and connecting data within organizations. It offers cyber resilience, which defends against cyber threats and prepares companies in case of a breach.

Its security solutions address digital forensics. It offers artificial intelligence and analytics for both structured and unstructured data, and its OpenText information management software platform provides security information across multiple levels, roles, and contexts.

So who exactly is using this company for digital security? Multiple members of FAANG for one. The company has strategic partnerships with Microsoft, Oracle, Alphabet’s Google Cloud, Amazon AWS, and countless other names that you’re likely to recognize. These partnerships have practically guaranteed income over the next several years thanks to subscription revenue. And that revenue continues to climb.

During the most recent earnings report, OpenText saw adjusted EBITDA climb by 14.5% year over year. Total revenue also grew by 2.2%, with cloud services and subscription revenue growing by 4.8%. Management remains confident that these numbers will only continue to grow. That’s especially true in a time when practically every business on the planet needs to have an online presence in a post-pandemic world.

How much?

Here’s the best part. OpenText is a steal at today’s share prices. It offers a price-to-book value of 3.3 and even offers a 1.58% dividend yield. You simply don’t get that with tech stocks. Shares are up a mere 8% in the last year, but you can look back even further with OpenText. At Motley Fool Canada, we like long-term holds. And OpenText is a rare case of offering historical data.

In the last two decades, shares have climbed 1,618% for a compound annual growth rate (CAGR) of about 15% as of writing. And what’s more, it’s not like BlackBerry stock, offering dips and jumps. It’s been a steady climb based on a steady industry.

OpenText is likely to continue growing as the world becomes even more online. With shares at just $61.50 as of writing, it’s a great time to get in on this stock during this tech stock pullback.

The post Move Over BlackBerry: This Stock Could Be a Much Bigger Long-Term Winner appeared first on The Motley Fool Canada.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, and Microsoft. The Motley Fool recommends BlackBerry, OPEN TEXT CORP, and Open Text and recommends the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon.

2021

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