Large-cap companies have dominated the stock market over the past year, with FAANG stocks generating hefty returns despite a global economic slump. Multi-billion-dollar industries have been capitalizing on their extensive market reach and global supply chains, along with significant financial backing, to lead the market.
As the developed world settles into remote lifestyles even after successful vaccine deployment, as is anticipated, the demand for technology is expected to rise. But, because mega-cap tech stocks are now trading at sky-high valuations, it might be a good idea to bet on small-cap tech stocks that are well positioned to benefit from emerging trends, driven by their disruptive technologies and strategic partnerships.
We believe promising small-cap stocks like Repay Holdings Corp. (RPAY), Ultra Clean Holdings, Inc. (UCTT), and Ideanomics, Inc. (IDEX) should be on the watchlist of every technology investor. Betting on these stocks could be slightly riskier, but they have high potential for growth and are trading at affordable prices.
Repay Holdings Corp. (RPAY)
RPAY operates as a payment technology enterprise. It is involved in facilitating bespoke transactions payment processing solutions for clients worldwide. Over the past year, RPAY’s stock has gained 61.4%.
RPAY recently partnered with LiveVox, a contact center platform, to deliver additional digital payment options to users along with greater processing capabilities. RPAY has also partnered with the Strategic Regional Healthcare Organization (SRHO) to provide SRHO’s members with new payment-automation capabilities.
For the quarter ended September 30, 2020, the company saw an increase in revenue of 43% compared to the same period last year. RPAY’s gross profit also increased 40% during the same period.
RPAY is expected to see revenue growth of 23.4% in 2021. The company’s EPS is estimated to grow 15.1% in 2021 and at a rate of 7.4% per annum over the next five years.
How does RPAY stack up for the POWR Ratings?
A for Trade Grade
B for Buy & Hold Grade
B for Peer Grade
B for Industry Rank
B for Overall POWR Rating
The stock is ranked #45 of 224 stocks in the Financial Services (Enterprise) industry.
Ultra Clean Holdings, Inc. (UCTT)
UCTT develops, designs, and manufactures systems that have applications in semiconductors and other manufacturing processes. The company has operations primarily in North America, Asia, and Europe. UCTT’s stock has returned 78.9% over the past year.
UCTT recently announced that it had entered an agreement to acquire Ham-Let (Israel-Canada), a public company listed on the Tel Aviv stock exchange, to expand UCTT’s addressable market by more than $2 billion.
For the quarter September 30, 2020, the company saw a 42.9% increase in total revenue versus the same period last year. UCTT’s gross profit increased 56.9% during the same period.
UCTT’s revenue is estimated to increase 14.7% for the quarter ended March 31, 2021 and 9.8% in fiscal 2021. The company’s EPS is expected to rise 9.6% in 2021 and at a rate of 20% per annum over the next five years.
UCTT’s strong fundamentals are reflected in its POWR Ratings. It has a “Strong Buy” rating with an “A” for Trade Grade, Buy & Hold Grade, and Industry Rank. It is ranked #53 of 99 stocks in the Semiconductor & Wireless Chip industry.
Ideanomics, Inc. (IDEX)
IDEX is involved in providing cloud-based financial solutions to enterprise customers. The company uses blockchain and artificial intelligence to provide digital asset securitization services. IDEX’s stock price has increased 289.2% over the past year.
IDEX recently completed the acquisition of Timios Holdings Corp, a nationwide title and settlement solutions provider. The company has also signed a definitive agreement to acquire Wave, a Utah-based wireless charging solutions provider.
For the quarter ended September 30, 2020, the company saw a 3.4-fold times increase in revenue compared to the same period last year. IDEX also reported a gross profit of $0.7 million during the quarter.
In our POWR Ratings systems, IDEX has been accorded a grade of “B” in Industry Rank. In the 115-stock Software – Application industry, IDEX is ranked #69.
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RPAY shares were trading at $23.15 per share on Wednesday morning, down $2.54 (-9.89%). Year-to-date, RPAY has declined -15.05%, versus a 1.50% rise in the benchmark S&P 500 index during the same period.
About the Author: Aaryaman Aashind
Aaryaman is an accomplished journalist that’s passionate about providing in-depth insights about investing and personal finance. Recently he has been focused on the stock market and he specializes in evaluating high-growth stocks. More…
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