The tech market leader you probably haven't heard of

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Key statistics: ASX: CDA

Closing share price: $2.410

52-week high: $2.655

codan

52-week low: $1.965

Most recent dividend: 4c

Annual dividend yield: 3.31%

Franking: 100%

In Adelaide, well away from Australia's better-known tech centres, is a small, innovative company called Codan (ASX: CDA) that many argue is leading the world in the technology it creates.

Codan has a market capitalisation of just $430 million and, despite its size, one of its divisions is a global market leader, while another division has developed technology that could be used for automating mine operations.

The biggest division at Codan is Minelab, the world leading metal detection division.

If you've seen people scouring the local beach waving a metal detector in the hope of finding lost treasure, there's a good chance they're are using a metal detector made by Minelab, which has won a significant share of this market.

The recreational metal detection market, however, is relatively small compared with the gold detection market, where Codan sells machines that retail for $US10,000 ($13,000).

These gold detectors are used by independent gold prospectors, mainly in Africa. Codan commands a meaningful market share in Africa and the company reports strong sales of its flagship product over the past 18 months.

Because Minelab is active in three different subsectors of the metal detection market, it is able to defray its development costs across more products, helping to maintain a technological advantage over the competition.

Minetech is another interesting division.

Acquired a few years ago, Minetech has an exclusive CSIRO licence to use the same technology to track vehicles and personnel underground.

The system can be used to pinpoint, within 30 millimetres, the location of a truck or a worker underground. Competing systems offer precision of three metres.

Codan has also recently signed a co-operation agreement with Caterpillar (US: CAT), which is the world's largest manufacturer of mining equipment.

The list of Australian technology companies with commanding market shares is currently short, so Codan is somewhat unique.

At 14 times annualised earnings, the shares of this radio communications, metal detection and mining technology company look very attractive, especially after the Caterpillar deal.

While this isn't necessarily going to be material to earnings in the 2018 financial year, in the long-term we think it has the potential to be a key driver of growth.

The Montgomery Funds own shares in Codan

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Roger Montgomery is founder, chairman and chief investment officer of Montgomery Investment Management. Following a successful career as an analyst and public company chairman, Roger published the first edition of his stock market guide, Value.able, in 2010, becoming an Australian best seller in just 16 weeks. He holds a Bachelor of Commerce and is a senior fellow of the Financial Institute of Australasia.