As virtually every industry relies more and more on innovative technologies like artificial intelligence (AI), robotics, and machine learning, the stock market continues to be dominated by tech stocks that are effectively disrupting life as we know it.
The fact is, over the last two decades, technology has become such an integral part of our lives from the moment we are woken by our smartphone to when our smart homes turn off the lights in the evening.
This continual shift towards faster speeds and greater interconnectivity offers investors an entirely new sector to capitalize on. Indeed, we are referring to 5G or fifth-generation technology, and there are a handful of small-cap tech stocks that could offer major upside.
The latest tech advancement generating excitement in the markets and beyond is 5G, an innovative technology that has the capability to drive significantly greater efficiencies in virtually every industry, from manufacturing to healthcare.
One of the small-cap tech stocks that is positioned to capitalize on the impending 5G boom is Axcelis Technologies (NASDAQ:ACLS), a global leader in the design, development, and manufacturing of ion implantation systems for the semiconductor industry.
Axcelis is becoming a staple in the 5G market due to its efficient ion implantation chips, which allow data to process at the rapid speed required by devices running on 5G.
Analysts have continued to see value in Axcelis, with several “BUY” rating being handed to the company in the last few months. Zacks recently upgraded Axcelis to a “Strong BUY,” while DA Davidson and Craig Hallum Capital Group offered a “BUY” rating and a 12-month price target of US$30 and US$27, respectively.
It’s no surprise the company is getting a ton of analyst love after it surpassed Q3 earnings estimates by a long shot.
Boingo Wireless Inc.
Another small-cap tech stock that offers massive potential is Boingo Wireless Inc. (NASDAQ:WIFI), a company that manages and operates a Wi-Fi network at over 1,500 hotspots that reach over 1 billion customers annually.
The company uses small cells along with a Distributed Antenna System (DAS) to boost cellular coverage in heavily trafficked locations like airports, college campuses, convention centers, stadiums, entertainment venues, and transportation hubs.
In Q2 2019, Boingo Wireless deployed 10 new DAS networks in partnership with Tier 1 carriers at high-traffic venues throughout the US, increasing its total live DAS venues to 69. All of the company’s DAS networks are implemented with a technology-agnostic approach and complement its full suite of wireless solutions, which includes 5G, LTE, mmWave, Wi-Fi, Wi-Fi 6, Wi-Fi offload via Passpoint, IoT, and CBRS.
Like Axcelis, Boingo Wireless was recently upgraded to a “Strong BUY” rating by Zacks, while Craig Hallum and William Blair reaffirmed a “BUY” rating for the company.
The consensus price target from the nine brokerages covering Boingo is US$18.25, which is well above the company’s current price of US$12.21. Since the beginning of the year, Boingo stock has increased by 14.11%.
The company posted a Q3 2019 revenue of US$64.7 million and expects its full-year 2019 revenue to be in the range of US$267 million to US$273 million.
Ceragon Networks Ltd.
When it comes to small-cap tech stocks that are helping fuel the 5G revolution, Ceragon Networks Ltd. (NASDAQ:CRNT) can’t be discounted for its part in the movement. The wireless backhaul specialist is redefining wireless transmission with its FibeAir IP-20C, a highly versatile and compact wireless backhaul node that allows for faster speeds and more data and creates the optimal ecosystem for 5G.
The company’s ultra-high-capacity wireless backhaul, which is essentially the backbone of the network, will enable mobile operators to keep up with capacity demands and maintain excellent customer service.
Ceragon Networks reported Q3 2019 revenue of US$72.2 million, which was down 11% from the previous quarter. Moving forward, the company will focus on reinforcing its tech leadership with “ongoing investment in R&D, maintaining its financial strength with tight expense control, strong working capital management and remaining resilient in order to fully capitalize on the ramp in 5G deployments.”
According to Ceragon CEO Ira Palti, the company expects the 5G push to drive overall growth in 2020.
By end of day Thursday, Ceragon stock was up 3.59% to US$2.31, but one analyst expects the company’s share price to reach US$3.50 in the next 12 months.
While some small-cap tech stocks will help fuel the 5G boom, others will run smoother because of it. MicroVision Inc. (NASDAQ:MVIS) is a company that develops laser scanning technology for projection, 3D sensing, and image capture.
The company’s patented PicoP® scanning technology utilizes an ultra-miniature MEMS mirror to scan a modulated laser beam using state-of-the-art control systems, which provides enhanced image quality and an HD picture that is always-in-focus. MicroVision also developed a MEMS-based Consumer LiDAR 3D sensing engine, which delivers low latency and high-fidelity spatial awareness to AI-embedded hardware and applications.
Essentially, the 3D sensing engine acts as a substitute for smart home assistants like Google Home and Alexa and has the ability to track and detect movement and then automatically respond to it by turning on lights, adjusting thermostats, unlocking smart doors, and more.
When 5G rolls out, it will decrease latency while at the same time increase consumer privacy by skipping cloud processing and, in turn, help MicroVision services to run even better.
Analysts have remained bullish about MicroVision, with two Wall Street analysts offering the company a consistent buy rating for the 4-months. The average 12-month price target for the company is US$2.75, which is 281.94% higher than its current US$0.72 share price.
Another one of the small-cap tech stocks that will utilize the 5G network to offer better services is Inseego Corp. (NASDAQ:INSG), a pioneer in 5G and intelligent IoT device-to-cloud solutions.
In October 2019, Inseego conducted live demos of its new commercially available 5G NR products with NVIDIA (NASDAQ:NVDA), Verizon (NYSE:VZ), and Ericsson (NASDAQ:ERIC) at Mobile World Congress Americas 2019 in Los Angeles.
“We’re excited to be working with so many mobile service providers and 5G ecosystem partners who are bringing new 5G use cases to life using our patented MiFi® iQ technology,” said Inseego Chairman and CEO Dan Mondor. “Earlier this year, we introduced the first commercially available 5G NR mobile broadband hotspot, and now dozens of companies have adopted Inseego 5G solutions to power a new wave of applications.”
The company also reported Q3 revenue of $62.7 million, which beat forecasts by 5.4%, and revealed that its 5G revenue could exceed US$10 million for 2019.
In November 2019, Canaccord Genuity analyst Michael Walkley said he saw Inseego’s current low price creating a buying opportunity and gave the company a US$8.50 price target, which it has since exceeded.
Are there any small-cap tech stocks that you think are going to power the 5G revolution? Let us know in the comments!
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