The tech-heavy Nasdaq Composite closed yesterday’s session at a record high in-part because private payrolls data indicated the continuation of the low-interest-rate environment, which is favorable for the tech industry. In addition, due to industry’s ongoing digital transformation and remote working, the heightened demand for efficient tech devices should keep driving the industry’s growth.
Investors’ optimism about the tech industry is evident in the iShares U.S. Technology ETF’s (IYW) 4.8% gains over the past month, which surpassed the SPDR S&P 500 Trust ETF’s (SPY) 3.6% returns.
However, because concerns surrounding the pace of economic recovery due to rising inflation might lead to a market correction in the near term, betting on high-priced tech stocks now could be risky. Therefore, we think it could be wise to bet on smaller tech stocks O2Micro International Limited (OIIM), Everspin Technologies, Inc. (MRAM), PCTEL, Inc. (PCTI), Socket Mobile, Inc. (SCKT), and SilverSun Technologies, Inc. (SSNT). These companies are sufficiently fundamentally sound to deliver solid returns in the coming months. Their stocks are currently trading below $10 in price and have plenty of upside to deliver.
O2Micro International Limited (OIIM)
Headquartered in Cayman Islands, OIIM designs, develops, and markets integrated circuits and solutions for power management components and systems and computer security applications internationally. The company sells its products through a direct sales force, independent sales representatives, and distributors to OEMs, ODMs, and module makers. It has a $206.22 million market capitalization. On August 18, 2021, a patent was granted to OIIM for its dual input power management method and system. The invention monitors multiple power sources and prioritizes some power supply inputs to generate regulator output to power the system. This technology will likely witness high demand from consumer and industrial applications.
OIIM’s operating revenues increased 51.6% year-over-year to $26.21 million in its fiscal second quarter, ended June 30, 2021. The company’s gross profit came in at $13.49 million, up 52.3% from the prior-year period. Its income from operations came in at $328 million for the quarter, versus a $675 million loss in the prior-year period. While its net income increased 731.8% year-over-year to $3.16 million, its EPS increased 900% to $0.10. As of June 30, 2021, OIIM had $21.86 million in cash and cash equivalents.
Analysts expect OIIM’s EPS to increase 48.6% year-over-year to $0.44 in the current year. A $102.95 million consensus revenue estimate for the current year reflects a 31.4% increase year-over-year. OIIM surpassed the Street’s EPS estimates in three of the four trailing quarters. The stock’s EPS is expected to grow at a 19% rate per annum over the next five years. Over the past year, the stock has gained 153.5% in price to close yesterday’s trading session at $7.25.
OIIM’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
OIIM has an A grade for Value, and a B grade for Sentiment and Momentum. In the B-rated 99-stock Semiconductor & Wireless Chip industry, it is ranked #24.
To see additional POWR Ratings for Growth, Stability, and Quality for OIIM, click here.
Click here to checkout our Semiconductor Industry Report for 2021
Everspin Technologies, Inc. (MRAM)
MRAM manufactures and sells magnetoresistive random access memory (MRAM) products and storage class memory solutions internationally. The Chandler, Ariz.-based company serves OEMs and ODMs through a direct sales channel and a network of representatives and distributors in the data center, industrial, medical, automotive, aerospace, and transportation markets. It has a $145.69 million market capitalization.
On June 16, 2021, Lucid Group Inc.’s (LCID) Lucid Motors, an American electric vehicle manufacturer, designed its 256 Kilobit MRAM into the master powertrain system of its innovative Lucid Air all-electric luxury sedan. Certified for use in demanding memory applications that require extreme reliability in critical data capturing systems, the adoption of its MRAM technology in the Lucid Air is a strong endorsement of the value of persistent, non-volatile memory that does not have the traditional wear-out problems associated with alternative memory technologies.
In its fiscal second quarter, ended June 30, 2021, MRAM’s total revenues increased marginally from the prior-year period to $11.85 million. The company’s gross profit came in at $7.20 million, up 38.6% from the prior-year period. Its operating income was $456,000 for the quarter, versus a $1.09 billion loss in the prior-year period. MRAM’s net income came in at $256,000, versus a $1.29 million net loss in the year-ago period. Its EPS was $0.01, compared to a $0.07 loss per share in the prior-year period. The company had $14.22 million in cash and cash equivalents as of June 30, 2021.
A $12.20 million consensus revenue estimate for the current quarter, ending September 30, 2021, indicates a 20.6% rise from the year-ago period. Moreover, MRAM has surpassed consensus EPS estimates in three of the four trailing quarters. MRAM’s EPS is expected to grow at a 20% rate per annum over the next five years.
The stock has gained 50.7% in price year-to-date and 20.3% over the past month. MRAM closed yesterday’s trading session at $7.48, which was 61.2% higher than its 52-week low of $4.30.
MRAM’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which translates to Buy. In addition, MRAM has an A grade for Sentiment, and a B grade for Value and Momentum. Furthermore, it is ranked #39 of 99 stocks in the Semiconductor & Wireless Chip industry.
In addition to the POWR Rating grades I’ve highlighted, one can see MRAM’s ratings for Growth, Stability, and Quality here.
Click here to checkout our Semiconductor Industry Report for 2021
PCTEL, Inc. (PCTI)
With a $123.32 million market capitalization, PCTI designs and manufactures industrial Internet of Things (IoT), antenna systems, and test and measurement solutions worldwide. The company also offers radio frequency test and measurement products that enhance the performance of wireless networks with a focus on LTE, public safety, and 5G technologies. It serves OEMs, wireless equipment distributors, public and private carriers, wireless infrastructure providers, and value-added resellers. PCTI is headquartered in Bloomingdale, Ill.
Last month PCTI entered a distribution agreement with Master Electronics, a global distributor of electronic components, to help expand its antenna business in the Industrial IoT market. PCTI’s high performance and robust portfolio of antennas designed to deliver continuous wireless connectivity, and Master Electronics’ strong relationships, responsive service, and added value should enable it to gain expanded market reach in the coming months.
PCTI’s net sales for the fiscal first quarter ended June 30, 2021, increased 9.3% year-over-year to $21.68 million. The company’s gross profit came in at $9.94 million, up 4.4% from the prior-year period. As of June 30, 2021, the company had $8.43 million in cash and cash equivalents.
Analysts estimate PCTI’s revenue to be $86.49 billion for the current year, representing an 11.2% rise from the prior-year period. Also, the company beat the Street’s EPS estimates in each of the trailing four quarters. The stock’s EPS is expected to grow at a 10% rate per annum over the next five years.
PCTI has gained 2.3% over the past month and ended yesterday’s trading session at $6.74, which was 41.9% higher than its 52-week low of $4.75.
PCTI’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our proprietary rating system.
The stock has an A grade for Value, and a B grade for Sentiment and Quality. Click here to see the additional ratings for PCTI (Growth, Momentum, and Stability).
PCTI is ranked #9 of 54 stocks in the B-rated Technology – Communication/Networking industry.
Socket Mobile, Inc. (SCKT)
SCKT provides data capture and delivery solutions for enhanced productivity in workforce mobilization internationally. The company’s products are incorporated in mobile applications used in point of sale, enterprise mobility, asset tracking, manufacturing process and quality control, transportation and logistics, event management, medical, and education. The Newark, Calif.-based company has a $49.43 million market capitalization.
On August 3, 2021, SCKT released an updated version of the SocketScan S740, a Universal Barcode Scanner able to read 1D and 2D barcodes. The upgrade enables S740 to read smaller barcode scanning and most travel identification documents, including passports, international IDs, and micro QR codes on drivers’ licenses. SCKT hopes to capitalize on the growing need for digital ID verification.
For the fiscal second quarter, ended June 30, 2021, SCKT’s revenue increased 119.3% year-over-year to $5.95 million. The company’s gross profit came in at $3.26 million, up 139.2% from the year-ago period. Its operating income was $814,000 for the quarter, compared to an $810,000 loss in the prior-year period. SCKT’s net income was $2.63 million, versus a $768,000 net loss in the year-ago period. Its EPS came in at $0.27, versus a $0.13 loss per share in the prior-year period. As of June 30, 2021, the company had $4.92 million in cash.
SCKT has gained 451.2% in price over the past year and 181.2% over the past nine months. It ended yesterday’s trading session at $6.89, which was 520.7% higher than its 52-week low of $1.11.
It’s no surprise that SCKT has an overall B rating, which translates to Buy in our POWR Ratings system. In addition, the stock has an A grade for Sentiment, and a B grade for Growth, Value, and Quality. It is ranked #18 of 46 stocks in the B-rated Technology – Hardware industry.
Click here to see additional POWR Ratings in Momentum and Stability for SCKT.
SilverSun Technologies, Inc. (SSNT)
With a market capitalization of $36.31 million, SSNT in East Hanover, N.J., is a business application, technology, and consulting company that provides strategies and solutions to meet information, technology, and business management needs. Its services and technologies enable customers to manage, protect and monetize their enterprise assets, whether on-premises or in the Cloud.
On April 7, 2021, SSNT’s SWK Technologies, Inc. subsidiary established an IT security and compliance division, which is its next step in providing innovative and forward-thinking approaches to managed services. The company will offer cyber-security, business continuity, disaster recovery, application hosting, help desk, and cloud services through this division. Amid rising cyber threats, the company expects to witness high demand for its services in the coming months.
SSNT’s net revenues for its fiscal second quarter, ended June 30, 2021, increased 5.8% year-over-year to $10.23 million. Its gross profit was $4.27 million, representing an 8.4% year-over-year improvement. Its income from operations came in at $203,904 for the quarter, up 329.8% from the prior-year period. And SSNT’s net income was $130,289, representing a 288.8% increase from the prior-year period. Its EPS increased 200% year-over-year to $0.03. As of June 30, 2021, the company had $9.43 million in cash.
SSNT has gained 147.2% in price year-to-date and ended yesterday’s trading session at $7.07.
SSNT’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system.
The stock has a B grade for Momentum and Quality. We also have graded SSNT for Growth, Stability, Sentiment, and Value. Click here to access all SSNT ratings.
Of the 61 stocks in the Software – Business industry, SSNT is ranked #14.
Click here to checkout our Cybersecurity Industry Report for 2021
OIIM shares were trading at $7.15 per share on Friday morning, down $0.10 (-1.38%). Year-to-date, OIIM has declined -22.11%, versus a 21.85% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More…
