Among Canadian tech stocks, Shopify (TSX:SHOP) is undoubtedly the undisputed star. Over the past year, its gross merchandise volume surpassed US$100 billion, and revenue continued to grow at a rate of over 30%, making it a world class growth machine. Unfortunately, many investors missed the boat on that explosive price appreciation. So, is there another Canadian tech stock that offers a similar “asymmetry” to early Shopify – limited downside but far more upside potential than the market expects? The answer may lie in an under the radar software company based in Markham, Ontario: Enghouse Systems (TSX:ENGH).
The Quiet Profit Machine: Enghouse Systems
Enghouse develops enterprise software for contact centres, video communications, network management, public safety, and asset management. It doesn’t have the flashy growth curve of Shopify, but it possesses a set of traits that most tech stocks can hardly match: a long history of profitability, consistent acquisitions, and stable dividends.
The latest financials show that in the first quarter of fiscal 2026, Enghouse’s revenue came in at $120.1 million, down 3.1%, or C$0.32 per diluted share. These numbers are hardly “exciting.” But pay attention to two key metrics: adjusted EBITDA margin remained strong at 25.9%, and the company has ample cash on hand with solid operating cash flow. This is not a company in distress – it is a mature, highly profitable software business that is simply experiencing a temporary slowdown in growth.
Valuation and Dividend: The Core Source of Asymmetry
What truly gives Enghouse its “asymmetric” investment appeal is its extremely low valuation and generous shareholder returns. As of May 18, ENGH shares traded at just about $16.80, with a trailing price-to-earnings ratio of only 13.2x compared to Shopify′s 98x, it is practically a “bargain basement” price. Even more striking, the company pays an annual dividend of $1.24 per share, yielding a whopping 7.4%! In the tech sector, such a high dividend yield is extremely rare.
What does this mean? An investor buying Enghouse first gets a cash return of nearly 7.5% – like the coupon on a high yield bond. And on top of that “safety cushion,” they also get multiple call options: a business stabilisation, renewed acquisitions, valuation rerating, and more.
Similar Asymmetric Logic, But a Very Different Starting Point
Back in the day, Shopify became a multi-bagger precisely because market expectations were extremely low, while actual growth kept exceeding expectations. Today, Enghouse is at a similar starting point: the market expects almost nothing from it – revenue slightly down, profits slightly off – it looks completely unexciting. But for that very reason, any marginal improvement (such as a successful acquisition or a return to growth in its core business) could trigger a significant revaluation of the stock.
And what about downside risk? A 13x P/E ratio, a 7.4% dividend yield, an EBITDA margin above 25%, and a multi-decade record of consistent profitability all provide a solid margin of safety. Even if the macro economy worsens, Enghouse is unlikely to see a valuation collapse – the market is already pricing it as a “utility-like” software company.
Conclusion
Shopify remains a benchmark for Canadian tech stocks, but its lofty valuation has limited the room for asymmetric returns. In contrast, Enghouse Systems offers a completely different risk reward profile: buying a consistently profitable, cash flow generating, high dividend software asset at a very low valuation, while getting for free the potential upside from a business turnaround and valuation recovery. For investors who missed the early golden days of Shopify, ENGH may well be the most intriguing “asymmetric” opportunity on the TSX today.
