Magnet Forensics (TSX:MAGT) is one more sufferer of the latest tech rout. Shares of this Waterloo-based cybersecurity options supplier fell 15% in April after having fun with a gradual restoration in the last few months. As we speak, shares are buying and selling round a 28% year-to-date loss, in contrast with a 2.2% drop within the TSX Composite benchmark.
Although the present geopolitical and financial uncertainties may maintain the inventory extremely risky within the brief time period, I consider Magnet Forensics has the potential to change into Canada’s subsequent huge mutibagger inventory in the long term. Right here’s why.
Magnet Forensics’ younger journey on the TSX
It’s been one 12 months since Magnet Forensics went public and began buying and selling on the Toronto Inventory Trade. Tech buyers gave the IPO a heat welcome, and MAGT inventory climbed about 35% from its providing value of $17 per share on the very first day of buying and selling.
In the following couple of months, the inventory continued its spectacular upward journey because it soared to its document excessive of $64.90 per share in August 2021 on better-than-expected second-quarter outcomes. Notably, Magnet Forensics had posted an adjusted web revenue of round US$1.6 million — about 130% stronger than Bay Road’s expectation. Though a tech sector selloff in September 2021 trimmed MAGT inventory’s positive aspects, shares nonetheless managed to finish Q3 with stable 66% constructive returns at $42.55 a pop.
The inventory’s latest underperformance
Since then, the sector’s troubles have stored Magnet Forensics below stress: Rising inflation, the potential for aggressive rate of interest hikes within the close to time period, provide chain disruptions, and fears of slowing world financial progress all proceed to bitter buyers’ urge for food for tech shares. Notably, Magnet Forensics shares have dropped 44% between October 2021 and April 2022 — making the corporate look undervalued at in the present day’s value close to $24.
The rising recognition of Magnet Forensics’ cybersecurity options
Magnet Forensics primarily focuses on offering digital investigation software program to prospects the world over. Its digital forensics, case analytics & intelligence, and digital discovery instruments are able to analyzing varied digital sources, together with IoT units and cloud companies. These instruments additionally assist organizations handle cybercrime proof — giving Magnet’s options a aggressive edge.
Due to the rising recognition of its easy-to-use, progressive cybersecurity merchandise, Magnet Forensics has a big buyer base of greater than 4,000 public and private-sector prospects in additional than 90 nations. To speed up its progress, the corporate continues to concentrate on new product updates and launches.
What may make MAGT a giant multibagger TSX inventory
I anticipate Magnet Forensics to change into the subsequent multibagger inventory on the TSX as a result of:
- Its easy-to-use options successfully examine and report cybercrimes
- The cybersecurity business has super progress potential
The pandemic accelerated the digital transformation traits of distant and hybrid work. Though this has a number of advantages for companies, corresponding to simply expandable market attain and decrease working prices, it additionally opens the door to extra cyber vulnerabilities.
Provided that, the demand for Magnet’s progressive digital investigation instruments is more likely to skyrocket as extra organizations than ever attempt to defend their essential knowledge. This demand issue may assist Magnet Forensics maintain crushing analysts’ earnings estimates and drive a giant rally in its inventory. That’s why you might need to make investments on this seemingly low cost tech inventory with enormous upside potential — earlier than it’s too late.