Looking for undervalued stocks is not easy, especially in the tech industry. There are hundreds of companies to choose from and many things to consider. Still, finding overlooked tech stocks might be worth the hassle, as companies in the sector often experience explosive growth. 

But how do you pick the winners without combing through every tech stock? It’s not always about hype and prospects; their fundamentals and previous financials should also reflect their potential. Plus, having a look at what analysts say about the stock is another good indicator.

So, let’s look at some overlooked tech stocks today and discuss why they deserve your attention. 

To get the list of stocks here, I screened the market with the following criteria: 

• Small cap (between $300 million to $2 billion in market cap),
• At least a buy rating from analysts,
• A minimum of 5 analysts covering the stock,
• Consistent three-year positive revenue growth,
• Latest full-year revenue increase of at least 10%,
• Latest full-year EPS growth of at least 10%, and
• Trades at $5 and above.

I then sorted the list based on potential upside (as per analysts); here are the top three:

Top Overlooked Tech Stocks: Pagaya Technologies (PGY)

Fintech is one of the transformative industries today. It gives consumers underserved by traditional banks access to finance, which is why companies like Pagaya Technologies (NASDA:PGY) continue to thrive. 

Pagaya is an Israel-based software company specializing in data science and artificial intelligence that allows lenders to make accurate credit assessments in real time. The company’s network allows its customers to easily identify which of their customers are potentially high-risk clients and avoid unnecessary risk.

Pagaya reported a record-breaking Q1’24. Network volume reached a record $2.4 billion, exceeding company expectations, up 31% YOY. Likewise, total revenue and other income reached $245 million, increasing by another 31%. 

The company has registered three consecutive years of impressive revenue growth and shows no signs of slowing. Meanwhile, EPS went from negative $8.22 in 2022 to negative $2.14 in 2023. Analysts share the optimism by rating the stock a strong buy. High target estimates for PGY reach $42, representing an impressive 247% upside potential, making it one of the most attractive overlooked tech stocks today. 

Weave Communications (WEAV)

Weave Communications (NYSE:WEAV) is a healthcare-centered business telephony system provider that allows healthcare businesses to streamline day-to-day operations with various product offerings. 

Its platform features include Weave Email Marketing, Web Assistant, and Weave Text Messaging. The company continuously improves its services via integration with other tools, such as InfiniteVT for vision therapy and Shepherd, a cloud-based veterinary management software. 

In FY’23, Weave’s revenue was up 19.9% YOY. Net cash from operating activities also reached $10.2 million – a massive improvement from last year’s negative $12.8 million. While the year ended in a loss, the company still saw a sizable improvement in its bottom line, which ended at a $34.4 million loss compared to last year’s $49.7 million loss. 

This continuous revenue and earnings improvement trend shows Weave is taking the right steps toward profitability. Analysts rate Weave a strong buy with an upside potential of over 98%, making it a potential bargain for investors looking overlooked tech stocks.

ACM Research (ACMR) 

The semiconductor industry is taking over the news, thanks in part to the massive demand for AI. That’s why companies like ACM Research (NASDAQ:ACMR) continue to thrive. 

ACM Research specializes in semiconductor process equipment used in batch and single-wafer wet cleaning, polishing and thermal processes, and electroplating, vital to advanced semiconductor process device manufacturing.

The company recently introduced a new frame wafer tool for advanced packaging. The product aims to provide residue-free cleaning during the post-debonding process with minimal environmental impact.

ACM Research’s FY’23 metrics were quite impressive. As President and CEO Dr. David Wang puts it, the company “grew revenue by 43%, well above the market growth of wafer fab equipment (WFE) spending in mainland China.” Gross margins improved to 49.5%, revenue reached $557.7 million, and EPS improved from 66 cents to $1.29. 

The company fully expects the momentum to carry over through FY’24. Revenue guidance is between $650 million and $725 million. Also, analysts from big banks like Morgan Stanley and Goldman Sachs rate it a strong buy. The high target price for ACMR stock is $40, representing a near 70% upside potential. 

So, if you’re looking for overlooked tech stocks, watch for ACMR. 

On the date of publication, Rick Orford 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.