By: AllPennyStocks.com News

Tuesday, December 11, 2012

Sometimes a company trading outside of a senior exchange just looks a little out of place compared to exchange peers. Now, granted, some companies listed on the pink sheets are large foreign companies that are trading American Depositary Receipts, but that’s not the point of reference here. This is more about companies like Sylogist Ltd. (TSX-Venture:SYZ), a Calgary-based technology provider trading on the Venture exchange. Sylogist may still be considered a micro-cap with its market capitalization of only $73 million, but the provider of IP solutions is acquisition-hungry, pays shareholders dividends and seems to make moves to protect and increase shareholder value. Let’s face it, that’s different than most small companies. Sylogist also has institutional investors, including Mawer Investment Management Ltd, the holder of 10 percent of the 18.94 million outstanding shares of SYZ.

In the first nine months of fiscal 2012 ended June 30, 2012, Sylogist paid shareholders a total of 16 cents per share in dividends. During that period, revenues totaled $7.2 million as EBITDA improved to $3.2 million. The latest quarter ended with the company having working capital of $15.5 million, or 80 cents per share.

Looking to grow those revenues in coming quarters, in November Sylogist acquired privately-held RMS Solutions Inc., a certified developer and integrators of fuel management solutions with over $1 million in annual revenue. Sylogist snagged RMS for only $250,000 in cash, minus adjustments for deferred revenue. Additional payments are owed if historical revenues are exceeded.

On Tuesday, Sylogist gave reason for continued optimism for the future of the company by disclosing that it has received multi-year commitments by several independent school divisions, including some of the largest divisions, in the Province of Alberta. These school divisions have committed to the use of Sylogist's fully integrated Enterprise Resource Planning (ERP) systems, complete with specialized functions and features supporting unique and complex education payroll environments, running both in the cloud and on in-house platforms. Details weren’t released, but the company said that the contracts are worth “several millions of fee revenue” over the next number of years.

The stock chart of SYZ is a solid representation of the advancements of the company. Shares are always thinly traded as a circumstance of such a tiny float, but have been going vertical since July. Shares were stagnating between $1.70 and $1.90 per share throughout the first six months of the year, but a breakout through $1.90 in early July has been followed with a steady march to today’s all-time highs at $3.90.

With no resistance in sight the stock appears to have a nice tailwind behind it fanned by growing levels of profitability. Proper due diligence on this company that should perhaps consider graduating to the TSX is, as always, encouraged.

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