Hot Stock: Avigilon Corp.

Shares shot up 162% this year

Bryan Borzykowski 0
(Photo: Richard Newstead/Getty Images)

(Photo: Richard Newstead/Getty Images)

It’s rare for any stock to see a 188% return in a year, but it’s even less common to see that same stock obliterate market returns for a second year in a row.

Avigilon Corp. (TSX: AVO), a Vancouver-based company that designs, manufactures and sells high-definition security cameras, has already shot up by 162% this year and many analysts think it could climb even higher in the months ahead.

A big reason for the massive gains is that this company keeps surpassing analyst expectations. It’s third quarter revenues, which it announced on Nov. 5, came in at $51 million—a 101% year-over-year increase—or $10 million more than what National Bank analyst Kris Thompson had predicted.

Its earnings before interest, taxes, depreciation and amortization also beat expectations. EBITDA was $12.3 million versus Thompson’s $5-million estimate.

Some people are worried that this incredible growth will end, but Thompson doesn’t share that view. The company has some new products, including its small and discreet 1 and 2 Megapixel Micro Dome camera that should keep revenues climbing.

“The [Micro Dome] began shipping in August and its list pricing of $275 to $350 is very competitive and approaching the cost of analog replacement,” wrote Thompson in a Nov. 5 report.

Justin Kew, an analyst with Cantor Fitzgerald, is also bullish on the stock. In a Nov. 6 note he said that he still sees a lot of growth in a number of markets and praised the company’s products.

“This quarter clearly demonstrates the combination of extraordinary sales and market execution and best-of-breed network video management software and megapixel cameras.

“Demand remains high in all verticals including strategic accounts, casino, energy and architects and engineering.”

If Kew’s right about that demand, revenues could skyrocket again next year. He thinks the company’s 2014 top line will hit $250 million—30% higher than his 2013 fiscal year estimates.

Other analyst think the company’s fortunes—and stock price—will continue to climb too. According to Reuters, seven of the nine people who follow the stock say it’s a buy with12-month price targets reaching as high as $39.

Investors shouldn’t bet on returns of more than 100% for a third year in a row, but you may still get way above average returns.

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