Many investors think of Canada as the land of mining stocks, and not without good reason.
It's resource-rich and home to a legion of mining firms that produce everything from gold and silver to iron ore. Canada ranks among the world's top five producers of 14 mineral commodities and is the world leader in the production of potash and uranium.
Of course, as a long-time tech investor I've followed many of these mining firms for a very simple reason. Materials like gold, silver, and rare earths touch a wide swath of tech products, from advanced defense systems to web-enabled autos, smartphones, and tablets.
Here's the thing. Resource firms (along with Silicon Valley to the south) greatly overshadow Canada's burgeoning tech scene. Yet the nation is home to thousands of companies in computing, e-commerce, information technology, and medical devices.
The trade group, the Information Technology Association of Canada, says its industry alone counts some 33,300 companies. Together, they generate a combined $155 billion in annual sales.
Unfortunately, the most famous Canadian tech firm of all remains troubled BlackBerry Ltd. (Nasdaq: BBRY). And yes, the mobile phone maker is making a comeback, but it is still treading water in an industry full of proven winners.
So while the potential for BlackBerry's rebound may be appealing to some, we've got three Canadian tech plays that offer much richer returns. And BlackBerry's high-profile struggles effectively "hide" their profit potential…
Canadian Tech Opportunity No. 1
Mitel Networks Corp. (Nasdaq: MITL) is a small-cap communication and collaboration software company that caters to small and medium-sized businesses.
In particular, the company is known for its advanced contact center platform that includes mobile chat and also helps mid-market firms generate sales leads while lowering expenses.
Mitel has software that enables clients to communicate via hosted data centers known as The Cloud, which market analysts say is worth roughly $50 billion globally.
And the stock has a recent catalyst. In late January, Mitel completed the $370 million merger with fellow Canadian tech firm, Aastra Technologies.
The move solidifies its position in cloud computing and gives Mitel an annual sales rate of around $1.1 billion. It also means the combined firm now has 60 million users around the world and makes Mitel the market leader in Western Europe.
The new momentum means CEO Richard McBee's growth strategy is working. He joined the firm in early 2011, several months after the stock began a sharp decline under the previous CEO. Mitel fell from around $12.30 a share to roughly $2.30 by the end of 2011.
Now trading at around $10.20, it's up more than 161% in the last 12 months. But don't worry. The stock still has a lot of upside left.
If it just got back to its four-year high of $12.30 a share on April 22, 2010, that alone would mean an increase of 20%.
But I believe the stock will do much better than that as it has another new catalyst. You see, many institutional investors won't touch a stock below $10, or may be restricted from doing so.
At its current price Mitel has become "institutional grade," which should increase demand for the stock as more pros invest.
About the Author
Michael A. Robinson is a 35-year Silicon Valley veteran and one of the top technology financial analysts working today. He regularly delivers winning trade recommendations to the Members of his monthly tech investing newsletter, Nova-X Report, and small-cap tech service, Radical Technology Profits. In the past two years alone, his subscribers have seen over 100 double- and triple-digit gains from his recommendations.
As a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs and high-profile industry insiders. In fact, he was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon. And he was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
In addition to being a regular guest and panelist on CNBC and Fox Business Network, Michael is also a Pulitzer Prize-nominated writer and reporter. His first book, "Overdrawn: The Bailout of American Savings" warned people about the coming financial collapse - years before "bailout" became a household word.
You can follow Michael's tech insight and product updates for free with his Strategic Tech Investor newsletter.