Well before the novel coronavirus became a daily reality for us, technology-driven companies have always been among the most relevant investment opportunities. Due to the sector’s ability to accelerate societal progress — and in some cases like blockchain, to spark entirely fresh paradigms — tech stocks represent an important component of your portfolio. As well, there’s a case to be made to speculate on new or smaller-capitalization names.
As any financial advisor will tell you, it’s best to stick with established blue chips. Industry stalwarts typically command revenue predictability, imbuing them with a strong dose of confidence. Unfortunately, you pay a premium for that confidence with a greater valuation and thus lower profitability potential. But by choosing tech stocks among the small-to-mid caps or those that recently went public, you can dial up your reward potential.
Of course, just because you’re trading lesser-known shares doesn’t guarantee you upside success. That’s one of the pitfalls of banking too heavily on market aphorisms. Yes, the idea is to buy low and sell high but that’s much easier said than done. Often times, you’ll see rookie investors make big mistakes by acquiring low-priced tech stocks thinking it’s a great deal. Usually, that deal becomes even “better” — for the short traders.
However, that doesn’t mean you avoid all risk. If you want to be truly successful in the capital markets, you’ve got to know when to take risks and when to back off. Depending on your time frame and your investment goals, you should allocate a reasonable amount of your portfolio to tech stocks to buy that are basically your portfolio’s power hitters — they’re not going for high averages necessarily but for moon shots.
Perhaps the biggest argument of all is that technological innovations is what will help us navigate the post-pandemic environment. Indeed, the only reason we’ve gotten so far is through technologies across almost every sphere of industry. If you can absorb uncertainty, take a look at these tech stocks to buy.
- Duolingo (NASDAQ:DUOL)
- Latch (NASDAQ:LTCH)
- PubMatic (NASDAQ:PUBM)
- Allot (NASDAQ:ALLT)
- Karooooo (NASDAQ:KARO)
- Ping Identity (NYSE:PING)
- Sarcos Technology and Robotics (NASDAQ:STRC)
As we’re dealing with stocks to buy with a less-established track record in the market, you’ll want to exercise vigilance with these names. In particular, recent volatility in the broader indices could translate to downwind pain. Therefore, you’ll want to conduct your own due diligence before proceeding.
Tech Stocks to Buy: Duolingo (DUOL)
One of my favorite educational tech or edtech names, Duolingo recently launched its initial public offering in July of this year. Providing a fun and convenient way to learn a new language, Duolingo helps anyone — but I would say Americans in particular — to become better ingrained in our increasingly globalized economy.
As I mentioned in my IPO coverage for Benzinga, a Washington Post article mentioned that only 20% of American residents speak a second language. Thus, the U.S. lags other nations on a per-capita basis regarding language abilities. Further, I stated the following regarding DUOL’s long-term potential:
“But the implications are even bigger for DUOL stock on the global scale. So, while English is the predominant language of the internet, Chinese is a close second. And this dynamic reflects in the economic power structure of the world. Currently, the U.S. is the world’s largest economy but that crown will likely not last forever. In fact, a BBC report indicated that China could overtake the U.S. by 2028, a pushed-up date from prior forecasts due to the COVID-19 impact.”
To be fair, Duolingo will require patience since it’s not a profitable company. However, that’s quite normal for promising tech stocks to buy.
While the Covid-19 crisis has imposed massive disruption to every industry, one sector that’s feeling the pressure is the broader real estate market. Certainly, headlines rage about the ongoing (and unprecedented) bullishness in the residential housing segment. Yes, home sellers are cashing in on this spending wave but that also leaves new buyers scrambling for money they don’t necessarily have in a possibly unsustainable arena.
But just as importantly, the commercial real estate segment is due for its own paradigm shift, especially as workers return back to the office. That makes Latch, a relatively new public entity which launched its IPO late last year, a potentially viable idea among tech stocks to buy. Billed as a “full-building operating system of software, products, and services designed to make every building better,” Latch may be critical during the post-Covid environment.
As Luke Schoenfelder, co-founder and CEO of Latch stated, “The biggest back to office moment in history is around the corner, and Latch’s technology will ensure that office building staff, tenants, and visitors have a seamless experience from day one.”
I don’t think I could have said it any better myself. If you can handle some of the ambiguities involved with the company’s limited operating history, LTCH is one of the tech stocks to gamble on with your speculation funds.
Tech Stocks to Buy: PubMatic (PUBM)
Having worked in the online publishing game for the last several years, I’m well aware how competitive this arena is. Everyday, you’re fighting for relevance and whatever edge you can scrounge up, it’s well worth its weight in gold. As more companies shift their businesses over to online channels, the demand for internet-and-mobile-based advertising solutions will only increase, thereby boosting PubMatic’s profile.
As a developer of online advertising software and strategies for the digital publishing and advertising industry, PubMatic has enjoyed a sales surge as e-commerce became practically the only viable channel for non-essential business activities during the Covid lockdowns. In the company’s second quarter of 2021 earnings report, it disclosed revenue of nearly $50 million, up over 88% from the year-ago level.
On a trailing-12-month (TTM) basis, PubMatic is looking at top-line sales of $187.3 million, exceeding the full year 2020’s tally of $148.7 million by 26%. Of course, we’re talking about small potatoes here when compared to other tech stocks but that’s exactly the point.
Having launched its IPO late last year, PUBM could be one of the surprise hits in the tech ecosystem as various companies look to rebound from an awful year in 2020.
To be upfront, Allot has been around the block compared to the other tech stocks on this list, having entered the public market in 2006 — and thus before the Great Recession which momentarily took everything down. Since then, it’s had some major ups and downs. But this small-cap company could possibly be on another leg higher. So if you have some speculation funds lying around, it might be worth checking out.
Based in Israel, Allot offers innovative network intelligence and security solutions for communications service providers and international enterprises. What makes Allot especially pertinent in the post-pandemic landscape is its 5G network security solutions. As the company’s website states, 5G is a gamechanger, facilitating innovations across the board — but only if such networks can stop distributed denial of service (DDoS) attacks.
In addition to enterprise-level concerns, Allot offers peace of mind for residential consumers. This segment has become increasingly important for cybersecurity firms as the work-from-home transition last year expanded the footprint of vulnerability to nefarious actors.
To be clear, ALLT isn’t one of the easiest tech stocks to buy due to consistent net losses. However, the ramped up relevance of the underlying business could make it enticing.
Tech Stocks to Buy: Karooooo (KARO)
I must admit, when I first encountered the company name Karooooo, I thought it was a joke. I’m sorry, but adding five Os is not the most professional choice for a brand identity. Also, it’s very difficult to read and optically unattractive. Thank goodness that the underlying business does most of the talking.
Headquartered in Singapore, KARO claims that it’s a “leading global mobility SaaS [Software as a Service] platform that maximizes the value of automotive and workflow data by providing real-time data analytics solutions for smart transportation to over 1.3m connected vehicles.”
Specifically, the company’s Cartrack platform “provides customers with differentiated insights and data analytics to optimize their business and workforce, increase efficiency, decrease costs, improve safety, monitor environmental impact, assist with regulatory compliance and manage risk.”
Naturally, this segment will likely attract significant competition, which probably explains why investors haven’t been too fond of the idea since KARO IPO’d back in April of this year. However, the company’s international footprint does allow it to dominate markets that rivals might not reach.
In its most recent quarter ending May 31, 2021, the company posted revenue of $44.6 million, up nearly 52% from the year-ago level. Moreover, KARO is profitable, suggesting a rethink in this currently downgraded opportunity.
Ping Identity (PING)
A cloud-based solutions provider, Ping Identity is essentially a two-way player among cloud tech stocks. On one hand, the company provides speed, stability and efficiency for an enterprise-level client’s front-facing operations, such as through communication APIs (application programming interface). As well, through Ping’s data analytics, enterprises can respond more effectively to consumer concerns and industry shifts.
On the other hand, Ping provides a security umbrella, enabling businesses that have fully committed to the work-from-home initiative to enhance employee productivity and to protect vital digital assets. Through one platform, Ping facilitates identity verification, authentication, authorization and monitoring services.
Fortunately, you don’t have to just take the company’s word for it as 60% of Fortune 100 organizations trust Ping, including 13 of the 15 largest U.S. banks and all of the largest global aerospace firms. Better yet, PING stock is undergirded by a strong growth trek, with its Q2 2021 sales up 34% year-over-year.
Still, as a company that IPO’d in September 2019, it still has some teething issues, particularly its expanding net losses. However, if you want to take a shot on a relevant business, PING might pleasantly surprise you.
Tech Stocks to Buy: Sarcos Technology and Robotics (STRC)
Before I get into the final idea for tech stocks to buy, let me state upfront that Sarcos Technology and Robotics is pure speculation. It was always going to carry a risk due to the highly advanced nature of its business.
As I mentioned in my coverage for Benzinga on this recent IPO, its wearable exoskeleton is something out of the classic science-fiction movie Aliens. And on paper, the math seems to make sense. Here’s what I had to state:
“Per [a] Bloomberg report, Sarcos will ‘lease its exoskeleton, wearable device starting at $100,000 a year, similar to the total cost of hiring a worker for $25 an hour in the U.S.’ At first, this figure seems like a losing proposition. According to the Economic Research Institute, the average warehouse worker — who might find exceptional benefits in using augmented wearable robotics technology — in high standard-of-living California makes $38,109 a year or a little over $18 an hour.
Obviously, under this narrowly defined framework, a warehouse manager would rather hire someone at $18 an hour rather than pay that same salary plus an equivalent lease at $25 an hour. However, Sarcos CEO Ben Wolff emphasized that the company’s value proposition is “to deliver the productivity of 3, 4 or 5 workers, depending on the use cases, industry and the job.” Therefore, at minimum, Sarcos’s robotics will provide the hourly output of $54 of productivity costs but at the overhead expense of $43 an hour.”
However, getting enterprise clients to bite has been a different story, with STRC getting pummeled shortly after its debut. But it also might make for a compelling story for the patient speculator.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.