2 Tech Stocks That Need to Be on Your Radar in 2018

Tucows Inc. (TSX:TC)(NASDAQ:TCX) and Open Text Corp. (TSX:OTEX)(NASDAQ:OTEX) had an impressive 2017 and should not be ignored to begin this year.

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The broader Canadian economy is facing a plethora of challenges as it opens 2018. Investors were skittish midway through 2017, as oil prices plunged, and the Ontario housing market experienced the most severe turbulence since the Great Recession. However, there are a number of growing sectors that should inspire confidence looking ahead.

The S&P/TSX Index rose 6% in 2017. The strength of tech stocks early in the year managed to offset losses in energy, housing, and bank stocks.

We are now entering the final two years of a decade that has brought tremendous changes. Today, we are going to look at two stocks that offer promising long-term growth.

Tucows Inc. (TSX:TC)(NASDAQ:TCX)

Tucows stock shot up 87.5% in 2017. In a late November article, I’d covered the impending repeal of net neutrality in the United States and how it could potentially affect Tucows. On December 14, the Federal Communications Commission (FCC) voted to officially repeal net neutrality by a three to two vote. Historically, Tucows leadership has been vocal in its support of a “free and open internet,” which included a commitment to the principle of net neutrality.

Tucows stock has climbed 12% since the repeal. Monica Webb, director of market development and government affairs for Ting, a mobile virtual network company and subsidiary of Tucows, was interviewed recently on the subject. Webb vowed that Ting would continue to “uphold the principles of net neutrality, whether we are required to or not.”

Tucows released its third-quarter results on November 9. Net revenue rose 73% to $85 million, and net cash from operating activities jumped 38% to $7.2 million. Revenue in domain services and retail more than doubled in the quarter. The stock has climbed an astonishing 1,500% over a five-year period. It is the second-largest domain registrar in the world.

Shares are trading near all-time highs to open 2018.

Open Text Corp.(TSX:OTEX)(NASDAQ:OTEX)

Open Text  is a Waterloo-based company that develops and sells enterprise information management (EIM) software. The stock increased 7.8% in 2017. In early December, Open Text announced that it was expanding its employee base in India. Later in the month, Davigel, a provider of branded frozen and chilled food products, chose Open Text to manage its business-to-business information flows for its global network.

Open Text released its fiscal 2018 second-quarter results on November 2.

Total revenues were up 30.3% to $640.7 million year over year, with recurring revenues up 28.8% to $489.3 million. Adjusted EBITDA increased 32% to $219.9 million. The company also announced a quarterly dividend of $0.17 per share, representing a 1.5% dividend yield.

Shares of Open Text have climbed 61% over a five-year period, even after a stock split in early 2014. The stock pays a solid quarterly dividend and looks strong as we begin 2018. Open Text is a fantastic long-term option to buy and hold as we kick off the new year.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any stocks mentioned. Tom Gardner owns shares of Tucows. The Motley Fool owns shares of Open Text and Tucows. Open Text and Tucows are recommendations of Stock Advisor Canada.

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