Thanks for the great support.
We like both names. TIXT is trading at 13.8x Forward P/E, the lowest since being publicly traded. TIXT’s growth for the quarter is quite weak when excluding the result of the recent acquisition – WillowTree, growth was about 7% in constant currency when excluding WillowTree. Having said that, organic growth is expected to reaccelerate in the near term and the share price has already priced in the negative sentiment of recent weak fundamentals. We think investors need some patience on the name to see it recover.
TOI is a high-quality compounder, run by great management, a mini-CSU that is at CSU size many years ago. TOI has a long runway for growth to compound capital at a high rate, recent quarterly result is also promising with strong organic growth and accelerated revenue to 30% range. While we would not really consider TIXT as a sell, if only one is to be owned we would be fine moving to TOI as we do see it as better overall.