These three tech stocks are brimming with potential upside.
Finding undervalued stocks isn’t easy, especially in the technology industry. There are hundreds of companies to choose from and a lot to consider. Yet finding overlooked tech stocks can be tricky. Might be Companies in this sector often experience explosive growth, so the effort may be worth it.
But how can you pick winners without thoroughly researching all the tech stocks? It’s not necessarily the hype or outlook that matters. The stock’s fundamentals and past financials should also reflect the stock’s potential. Moreover, seeing what analysts are saying about the stock is also a good indicator.
So today, we’ll take a look at some overlooked tech stocks and discuss why they’re worth watching.
To get the stock list here, I screened the market on the following criteria:
- Small Cap (market cap between $300 million and $2 billion)
- The stock has at least a buy rating from analysts.
- At least five analysts cover the stock,
- Three consecutive years of positive revenue growth
- Latest full-year revenue growth of at least 10%;
- Latest full-year EPS growth rate of at least 10%;
- It trades for over $5.
We then sorted the list based on potential upside (according to analysts). Here are the top three:
Top 10 Overlooked Tech Stocks: Pagaya Technologies (PGY)
Source: rafapress / Shutterstock.com
Fintech is one of today’s transformative industries, providing access to finance to consumers who are underserved by traditional banking. Pagaya Technologies (NASDA:PGY) continues to thrive.
Pagaya is an Israeli-based software company specializing in data science and artificial intelligence to empower lenders with accurate credit assessments in real time. Their network enables clients to easily identify potentially high-risk customers and avoid unnecessary risk.
Pagaya reported a record-breaking first quarter of 2024. Network volume hit a record high of $2.4 billion, beating the company’s expectations and up 31% year-over-year. Similarly, total revenue and other income reached $245 million, also up 31%.
The company has posted impressive revenue growth for three consecutive years and shows no signs of slowing down. Meanwhile, EPS has fallen from -$8.22 in 2022 to -$2.14 in 2023. Analysts share the optimism and rate the stock a Strong Buy. PGY’s high price target of $42 gives it a staggering 247% upside potential, making it one of the most overlooked tech stocks right now.
Weave Communications (WEAV)
Image source: Shutterstock
Weave Communications (New York Stock Exchange:Weave) is a healthcare-focused business telephony system provider that offers a wide range of products to help streamline the day-to-day operations of healthcare businesses.
Their platform features include Weave Email Marketing, Web Assistant, Weave Text Messaging, etc. The company is continually improving its services through integrations with other tools such as InfiniteVT for vision therapy and cloud-based veterinary management software Shepherd.
In FY23, Weave’s revenue increased 19.9% year over year. Net cash provided by operating activities also reached $10.2 million, a significant improvement from last year’s loss of $12.8 million. Although the company ended the fiscal year in the red, profits improved significantly to a loss of $34.4 million, down from a loss of $49.7 million last year.
This continued trend of improving revenue and profits indicates that Weave is taking the right steps toward profitability. Analysts rate Weave a Strong Buy with over 98% upside potential, making it a potential bargain stock for investors looking for overlooked tech stocks.
ACM Research (ACMR)
Source: Pavel Kapiš / Shutterstock.com
The semiconductor industry has been all over the news due in part to the growing demand for AI. ACM Research (Nasdaq:ACMR) continues to thrive.
ACM Research specializes in semiconductor process equipment used for batch and single wafer wet cleaning, polishing and heat treatment, and electroplating, which are essential to the manufacture of advanced semiconductor process devices.
The company recently introduced a new frame wafer tool for advanced packaging, which aims to deliver residue-free cleaning during post-de-stripping processes while minimizing environmental impact.
ACM Research’s FY23 metrics were very impressive. As President and CEO Dr. David Wang put it, the company “grew revenues 43%, well outpacing market growth in mainland China wafer fab equipment (WFE) spending.” Gross margins improved to 49.5%, revenue reached $557.7 million, and EPS improved from 66 cents to $1.29.
The company expects this momentum to continue through fiscal year 2024. It has a revenue outlook of between $650 million and $725 million. Analysts from major banks such as Morgan Stanley and Goldman Sachs also rate the company as a strong buy. ACMR shares have a high price target of $40, which gives them upside potential of nearly 70%.
So, if you’re looking for an overlooked tech stock, keep an eye on ACMR.
As of the publication date of this article, Rick Orford did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are solely those of the author, which is subject to InvestorPlace.com copyright. Publication Guidelines.
