Although the high volatility of small-cap stocks can often deter investors, several promising small-cap tech stocks are catching the eye of analysts lately due to their growth potential.
From IT management companies to payment solutions to solar PV manufacturers, these small-cap tech stocks might be perfect for diversifying your portfolio.
Small-Cap Fintech Stocks to Watch
The financial world has always traditionally been a monopoly of major banks, making it near impossible for startups to break into the industry. However, as the world shifts to rely more and more on financial technology (Fintech) services, it opens up a ton of opportunities.
While fintech is nothing new, it has evolved significantly since the beginning of the 21st century, with services like mobile wallets, robotic advisors, payment apps, and equity crowdfunding platforms disrupting the financial industry and becoming commonplace.
PaySign Inc. (NASDAQ:PAYS) is one fintech stock that has a ton of potential. PaySign is a prepaid debit card payment solutions provider and integrated payment processor that has millions of prepaid debit cards in its portfolio. Although PaySign’s revenue is still relatively low compared to companies like Square (NYSE:SQ), the company saw a revenue increase of 55.2% in the first quarter, bringing in $7.25 million.
What’s more, PaySign’s stock has been rising steadily, increasing an impressive 350% already this year.
LiteLink Technologies (CSE:LLT) (OTCPK:LLNKF) is another company that offers payment solutions in the form of a digital wallet. LiteLink launched its uBUCK Pay app this year, a digital wallet and payments platform that serves as a payment alternative for merchants and consumers. It’s a US dollar-backed decentralized app that offers high security, record-breaking transaction speed, and doesn’t charge transfer fees.
On top of that, LiteLink recently signed a deal with Datable (TSXV:DAC) (OTCPK:TTMZF) to allow uBUCK Pay customers to earn rewards for payments and purchases.
Solar Tech Stocks to Watch
Another technological advancement that is gaining steam is solar power, as the world shifts from fossil fuels to renewable energy sources.
Canadian Solar (NASDAQ:CSIQ) is a global leading manufacturer of solar PV modules and a provider of solar energy solutions with successful business subsidiaries in 19 countries on six continents.
CFRA Research analyst Angelo Zino upgraded Canadian Solar due to the company’s improving margin profile and attractive valuation, offering it a “buy” rating and $22 price target.
Another small-cap solar tech stock on CFRA’s radar is JinkoSolar Holding Co. Ltd. (NYSE:JKS), a China-based solar panel designer and manufacturer. According to Zino, the company’s recent $150 million capital raise will assist in expanding its production capacity. What’s more, the depreciation of the Chinese renminbi could potentially help stimulate demand for Chinese panels.
SunPower Corp. (NASDAQ:SPWR) also designs and manufactures high-efficiency solar panels and systems, and has offices in North America, Australia, Europe, Africa, and Asia. Zino believes that SunPower’s shift to residential and commercial solar offerings and the company’s exemption from tariffs differentiates it from other small-cap solar tech stocks.
SunPower stock has gone up over 200% this year and exceeded CFRA’s price target of $10 last week. The research firm gives SPWR a “strong buy” rating.
Innergex Renewable Energy (TSX:INE) (OTCPK:INGXF) is another small-cap renewable energy company that develops, acquires, owns, and operates wind and solar farms. Innergex operates in Canada, the US, Chile, France, and Iceland, and manages an impressive portfolio of assets with interests in 68 operating facilities.
Other Tech Stocks to Put on Your Watchlist
If solar power and fintech don’t float your boat, there are small-cap tech stocks excelling in other sectors that may be of interest.
One of these is Proofpoint Inc. (NASDAQ:PFPT), a cybersecurity company that is dominating the email security market. In fact, Proofpoint serves over 50% of the Fortune 1,000 companies with its email security services. Considering that analysts believe security-as-a-software has at least five more years of growth, with targetted email attacks becoming a huge threat to businesses, Proofpoint will likely have a very bright future.
Another tech stock that has a lot of potential is AcuityAds Holdings (TSXV:AT) (OTCPK:ACUIF). Following in the footsteps of Trade Desk (NASDAQ:TTD), AcuityAds is a programmatic advertising RTB (real-time bidding) & DSP platform that has a ton of potential. The company hit an important milestone last week when it gained conditional approval to graduate to the TSX.
AcuityAds has already had a great year, with shares up by 32% and Q1 revenue increasing by 247%. At $1.60 CAD, AcuityAds is a cheap tech stock to pick up with plenty of room for growth.
Do you have any small-cap tech stocks on your radar? Let us know in the comments!
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