The mega-cap FANG group of popular U.S. tech stocks has had a tremendous run throughout the past decade, delivering huge returns for long-term investors. However, many of these large-cap stocks have started to become victims of their own success. High penetration has led to slowing growth rates and market dominance has led to increased antitrust scrutiny from regulators. Investors looking for tech stocks that have plenty of room to grow and likely won’t draw the attention of regulators can look to the small-cap tech space. Here are seven small-cap tech stocks to buy, according to CFRA.
BlackBerry (ticker: BB)
Just a few years ago, BlackBerry was the punch line to a joke about the market dominance of the Apple (AAPL) iPhone. Today, BlackBerry is a far cry from a smartphone maker. BlackBerry has become an enterprise mobile device management software company, and analyst Angelo Zino says sales are growing, margins are rising and BlackBerry is finally on the right track once again. The February acquisition of artificial intelligence and cybersecurity company Cylance should help BlackBerry grow revenue by 25% in fiscal 2020. CFRA has a “buy” rating and $12 price target for BB stock.
Canadian Solar (CSIQ)
CFRA includes several solar companies in its top small-cap stock ideas, and solar panel producer and solar solutions company Canadian Solar is among them. Zino recently upgraded Canadian Solar, thanks to the company’s improving margin profile and the stock’s attractive valuation. Zino is anticipating solar panel demand in both the U.S. and China will begin to rebound in the second half of 2019, potentially creating a short-term supply shortage that could boost prices and open the door for upward earnings estimate revisions. CFRA has a “buy” rating and $22 price target for CSIQ stock.
3D Systems Corp. (DDD)
Long-term 3D Systems investors got burned back in 2014 and 2015 when the 3D printing industry didn’t take off. However, Zino upgraded 3D Systems last month and says the market has simply gotten too negative on the battered stock. In addition to weakness in the stock, 3D Systems’ short interest as a percent of float is up to 21%. Zino says intense competition will weigh on margins, but consensus estimates have set a low bar to clear for the rest of 2019. CFRA has a “buy” rating and $10 price target for DDD stock.
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