Descartes Systems Group (DSGX) provides on-demand, software-as-a-service solutions focused on improving the productivity, performance and security of logistics-intensive businesses, explains Gordon Pape, editor of Internet Wealth Builder.

Its headquarters are in Ontario and its has offices and partners around the world. Customers use its solutions to route, schedule, track, and measure delivery resources; file customs and security documents for imports and exports; and complete numerous other logistics processes.

This information is especially important to importers and exporters during this time of global trade tensions and changing tariff structures.

Increasing demand for the company’s services pushed up the share price by about 60 per cent in 2019 but given the uncertainty in global trade markets and the need for up-to-the-minute data I am looking for more upside in 2020.

In December, the company released its financial results for the third quarter of fiscal 2020 (to Oct. 31). For the first nine months of the fiscal year, Descartes reported revenue of $241.6 million, up from $204.1 million in fiscal 2019.

Income from operations was $38.7 million compared to $30.7 million last year. Net income was $25.6 million ($0.31 per share), a modest improvement from $23.4 million ($0.30 a share) the year before.

The company continues to grow by acquisition. Last August, Descartes acquired BestTransport, a cloud-based transportation management system provider focused on flatbed-intensive manufacturers and distributors.

World trade disputes and tariff wars should continue to fuel demand for Descartes' software solutions, which provide up-to-date information required by importers and exporters. We rate the stock a buy.

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