Finding tiny tech stocks with huge upside potential is one of the thrills of investing. These small dynamos offer colossal profit potential alongside outsized risk levels. If you can handle the risk of sharp price declines, the rewards can be monstrous.
Here are five of my favorite tiny tech stocks:
1. Shotspotter (Nasdaq: SSTI)
A tiny $670 million market cap company is specializing in a unique and much-needed niche. Shotspotter’s technology identifies and analysis gunshots. In today’s violent world, what an incredible business!
It IPO’d in 2017 and has been upward trending.
The California-based firm provides its software on a recurring revenue, subscription model. Its tech works both indoors and outdoors, assisting law enforcement and security personnel who serve universities, colleges, and other educational institutions.
The primary clients are corporations trying to safeguard their facilities and public agencies focused on protecting critical infrastructure.
Shotspotter has around 70 communities and others as customers, which is steadily increasing.
A prime example of customer acquisition is the $23 million, multi-year contract just signed with Chicago.
Chicago now ranks as one of the firm’s top two clients along with New York City.
As unfortunate as it is, I can only see massive upside growth for Shotspotter.
I love this stock at $62.00 per share with an $88.00 per share target price and initial stops at $49.33 per share.
2. Momo (Nasdaq: MOMO)
Momo is a Beijing-based, small-cap holding company focused on mobile social networking in China. The shares have soared over 80% this year but are well off the highs.
All the key metrics are looking strong despite the negative macro Chinese sentiment. Management is guiding higher into the third quarter, and it appears that the current pullback sets up an ideal buy opportunity.
Price has fallen to support at the 50-day simple moving average with a break out above $45.00 per share is an ideal entry point. Our target price is $54.00 per share, and initial stops make risk/reward sense at $41.25 per share.
Remember, this is a Chinese company with the potentially questionable accounting practices of that nation. Proceed with caution no matter how good Momo looks on the surface.
3. Blackline (Nasdaq: BL)
Shares of this cloud-based accounting and financial services company have soared over 73% this year with the chart looking extremely bullish.
Revenue and free cash flow showed substantial gains in the second quarter due to an expanding customer base.
Bullish comments from the CEO bellies the upward momentum. Therese Tucker stated, “We are pleased with our second quarter results, which reflect the progress we are making on our key initiatives, landing a record number of large new deals and strong expansion within our existing customers. We believe the company is well positioned to help our customers embrace digital transformation in their finance and accounting departments.”
Get long on a break out above $57.00 per share with an $82.00 per share target price and initial stops set at $49.93 per share. Expect volatility soon!
4. AppFolio (Nasdaq: APPF)
AppFolio is another cloud-based, software solution company whose shares have been on fire in 2018. Nearly doubling in price, the stock has rocketed over 90% since January 1. Price has recently pulled back to support creating a near-perfect technical buying opportunity right now.
AppFolio focuses on the property management and legal space with its software solutions. It boasts a market cap just under $3 billion and expects the fiscal year 2018 revenue to post between $183 and $185 million.
Its verticals are part of a market that is basically recession-proof and will grow with population migration and expansion.
Currently, the price has pulled back to the classic support level of the 50-day simple moving average, creating an ideal buy opportunity at $79.50 per share. A target price of $100.00 per share and initial stops at $69.33 is my suggestion.
5. Paylocity (Nasdaq: PCTY)
Paylocity is a cloud-based software company specializing in payroll and human resources management.
The company posted a strong fourth quarter and FY 2018 results with 27% and 26% respectively revenue increases. Plus, the company approved a $35 million stock repurchase program that should help to push shares higher.
Shares have fallen off of their highs in the $87.00 zone and remain above support at both the 50 and 200-day moving averages.
Suggest waiting for the pullback to continue to into the 50 days simple moving average zone of $72.00 per share before considering longs. I like this company and its products, but the technical say wait before buying.
Risks To Consider: These tiny tech companies may have great businesses, but the sector is highly competitive, living or dying by innovation. Also, tech companies are innately volatile making them a high risk for investors. Always use stop-loss orders!
Action To Take: Risk embracing investors should consider adding one or more of the above stocks to their long-term portfolios!
— David Goodboy
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Source: Street Authority