Section1: Company Overview and Fundamental Insights:
1.1 Company Overview:
Converge Technology Solutions Corp (TSX: CTS) is a Canadian company building a platform of regionally focused Hybrid IT infrastructure providers that deliver best-of-breed solutions and services in the United States. The solutions provided include multi-cloud solutions, the blockchain, resiliency, and managed services, enabling the company to address the business and IT issues that public and private-sector organizations face.
1.2 The Key Positives, Negatives, Investment Highlights and Risks
1.3 Top 10 Shareholders:
The top 10 shareholders together form ~29.20% of the total shareholding. Mawer Investment Management Ltd. and British Columbia Investment Management Corp. hold a maximum stake in the company at ~8.81% and ~5.10%, respectively.
1.4 Key Metrics:
On a sequential basis, the company reported growth in financials, which is a significant positive. It has also shown an improvement in its revenue from both segments in Q3 2022. Moreover, on the back of healthy adjusted EBITDA in Q3 2022, the company reported elevated adjusted free cash demonstrating its strength and adaptability.
Section 2: Business Updates and Financial Highlights
2.1 Recent Updates: The below picture gives an overview of its recent activities, such as announcement regarding retention of its co financial advisors.
2.2 Insights on Q3 2022 Financial Performance:
Section 3: Key Risks and Company Outlook
Section 4: Stock Recommendation Summary:
4.1 Price Performance and Technical Summary:
4.2 Fundamental Valuation
Valuation Methodology: EV to EBITDA Multiple Based Relative Valuation (Illustrative)
Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is February 7, 2023. The reference data in this report has been partly sourced from REFINITIV.
Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.
Technical Indicators Defined: -
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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