Making money on the stock market isn’t all about investing in big tech stocks like Amazon, Microsoft, Google, or Facebook. Sometimes it can be far more beneficial to target smaller, niche-focused corporations that have the potential to strike big.
These companies, termed “micro-cap” companies, have a market capitalization somewhere between $50 million to $300 million and are often found on smaller exchanges like the TSX Venture Exchange. As smaller companies, they tend to be riskier picks, and sometimes analysts don’t know whether to recommend them or not. Typically, micro-caps specialize in new and innovative products that haven’t yet invaded the public consciousness.
When their products go to launch, because specialized micro-caps tech stocks face less competition, they have the opportunity to capture larger percentages of smaller markets. If the new product or service becomes a hit, the market can grow alongside the company.
Think about Netflix (NASDAQ:NFLX): its initial market cap when it went public in 2005 was $760 million. Not quite a micro-cap, but not far from it either. Today, Netflix’s market capitalization is $169 billion.
“100 baggers”—or stocks that have the potential to rise 100 times their current value, aren’t easy to pick, but they are there amongst the micro-cap dregs. And when we think of the companies that hit it the biggest—like Amazon, Microsoft, Google, or Facebook—we tend to think of technologically-inclined companies. These tech stocks cornered a new market just in time by offering the best innovations and the most forward-thinking outlook.
Here are a few micro-cap tech stocks with similar outlooks that might become the next industry leaders.
Patriot One
Patriot One Technologies Inc. (TSX:PAT) (OTCQX:PTOTF) only recently graduated from the TSXV to the TSX, just a little after the Venture Exchange ranked it the as second-best-performing stock in 2018. With its price currently at $1.90 and a market cap of $261.33 million, Patriot One has been cited as having an attractive relative strength index in the recent past.
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The company’s tech, however, is the most exciting thing about this tech stock. The PATSCAN CMR is designed to detect and defend against active shooter threats. Unlike a lot of other security system providers, Patriot One utilizes AI analysis and machine learning to offer a system that is consistently collecting data and improving itself over time.
The security market, and in particular the market for weapon detection systems, is projected to grow dramatically over the next few years. If the company ends up being anything like Avigilon Corp—a designer and manufacturer of surveillance equipment that was acquired last year by Motorola Solutions (NYSE:MSI) for $1 billion—Patriot One will be taking off sooner rather than later.
Universal mCloud
July has been a big month for Universal mCloud Corp. (TSXV:MCLD) (OTCQB:MCLDF), an asset management solutions provider headquartered in Vancouver, Canada. Its products use AI, analytics, and IoT sensors to allow oil and gas facility operators to remotely manage operational assets.
In the last month alone, this tech stock has announced that it netted $23.5 million from a convertible debenture financing, acquired both Fulcrum Automation Technologies and Autopro Automation Consultants, and delivered its first solutions to six oil and gas facilities in Alberta.
All this is in advance of a Q2 conference call with shareholders, which will give the executive team a chance to take a victory lap. Considering that analysts currently list mCloud’s target price at $1.20— and it currently sits at $0.40 on the TSXV—it’s likely that the company’s stock is currently being undervalued.
Taronis Technologies
At $13.76 million, the market cap for Taronis Technologies, Inc. (NASDAQ:TRNX) is small enough for the company to technically qualify as a nano tech stock. But with its stock leaping from $0.14 at the beginning of July to a high of $0.55 last week, it’s not likely to stay that way for long.
The price has been bolstered by Taronis’s good news, such as the success of its pilot project on water decontamination. It also announced its intention to launch a spin-off company, Taronis Fuels.
Taronis is beginning to immerge as a market leader in sustainability and eco-friendly technology. As more companies invest in clean solutions, Taronis will be providing the tech they need.
Do you have your eye on any micro-caps poised for growth, either in the tech sector or elsewhere? Let us know!
Featured image: DepositPhotos © violetkaipa
