Markets continued their volatile week Friday, with the Dow, the S&P 500, and the Nasdaq all down around 2% through morning trading. The up and down week follows a lightning quick market correction that came as the coronavirus dents the Chinese economy and spreads around the world and the U.S.
Market uncertainty is likely here to stay until there is a better understanding of when the spread of the coronavirus might end and how much it will impact the global economy.
Meanwhile, the yield on the benchmark 10-year Treasury sank below 0.8% for the first time ever. This came after the Fed cut its benchmark interest rate by half a percentage point on Tuesday in an effort to curb the economic slowdown. Plus, U.S. lawmakers passed an $8 billion-emergency spending package Wednesday.
There are, however, signs that the spread of the coronavirus in China has slowed and analysts are calling for the Fed to cut rates again. With all that said, the market has already tumbled and interest rates are historically low, so now might be time for investors to think about buying stocks, or at least adding some to their watchlists.
Today, we are diving into a more niche category of securities: tech industry stocks trading under $10 a share. Stocks trading under $10 can be more volatile than their pricier peers, but investors can still scoop up big returns with the right low-priced stocks…
The Rubicon Project, Inc. (RUBI)
Prior Close: $10.35 USD
The Rubicon Project is an ad exchange firm. RUBI, which topped our Q4 earnings estimates in late February, helps execute “tens of billions” of ad transactions every month and has carved out space in an industry dominated by Facebook (FB) and Google (GOOGL). The firm enables advertisers to reach consumers across Spotify (SPOT), eBay (EBAY), and other giant platforms, which is key as a majority of ad spending shifts online.
RUBI’s fiscal 2019 revenue jumped 25% and the firm announced in December that it plans to merge with Telaria (TLRA) to help form what it calls the “largest independent sell-side advertising platform.” When the stock-for-stock merger is completed, the combined company aims to offer a single platform for “transacting Connected TV, desktop display, video, audio, and mobile inventory across all geographies and auction types.”
Shares of The Rubicon Project have soared 445% in the last two years, from under $2 per share to their current price—which fell under our $10 threshold Friday. In fact, the market correction has set up a better buying opportunity for those high on RUBI, as they sit far below their recent and all-time highs.
RUBI’s positive earnings revision activity, especially for fiscal 2020, helps it earn a Zacks Rank #1 (Strong Buy) at the moment. The Rubicon Project also sports an “A” grade for Growth and a “B” for Momentum in our Style Scores system. Our Zacks estimates call for RUBI’s adjusted 2020 earnings to skyrocket from a loss of -$0.02 a share to +$0.21, with 2021 expected to jump all the way to +$0.32 per share. RUBI’s revenue is also expected to climb another 15% and 12%, respectively over the next two years.
Mitek Systems, Inc. (MITK)
Prior Close: $8.78 USD
Mitek Systems utilizes AI and machine learning to help financial institutions and other enterprises verify a user’s identity during digital transactions. MITK’s solutions are embedded in the apps of over 6,500 organizations and used by more than 80 million consumers to perform tasks such as mobile check deposit. Mitek topped our Q1 FY20 estimates at the end of January, driven by double-digit growth in mobile deposit and identity verification products.
Mitek’s fiscal 2020 and 2021 earnings revisions have climbed to help it earn a Zacks Rank #1 (Strong Buy). MITK also sports an “A” grade for Growth and it has crushed our bottom-line estimates in the trailing four quarters by a 32% average. Mitek shares are up 15% in the last three months and 165% in the last five years. Perhaps most importantly, the stock has plenty of room to run before it runs into its 52-week highs of $13 a share.
The San Diego-based company’s adjusted 2020 earnings are projected to surge 21.4% to $0.51 per share on 18.3% higher revenues. Then the company’s sales and earnings are both expected to climb another roughly 15% higher in 2021. And the mobile capture and digital identity verification firm could be poised to grow for years to come in our online and mobile-heavy economy.
Digital Turbine, Inc. (APPS)
Prior Close: $7.14 USD
Digital Turbine connects OEMs, mobile operators, and publishers with advertisers and app developers. The Austin, Texas-based firm has landed on Deloitte's Technology Fast 500 list multiple times and it completed on March 3 its acquisition of Mobile Posse. The company said that Mobile Posse’s “suite of highly-engaging content discovery products is a perfect complement to our core Digital Turbine platform offering.”
APPS shares have surged 115% in the last 12 months and its positive earnings estimate revision activity helps it grab a Zacks Ranks #2 (Buy). Digital Turbine also boasts “A” grades for Growth and Momentum for an overall “B” VGM grade. Plus, Digital Turbine’s valuation is now far more reasonable.
Digital Turbine’s adjusted Q4 2020 earnings are projected to soar 67% on 33% stronger revenue. Meanwhile, its full-year fiscal 2020 EPS figure is expected to surge 163%, while sales are set to jump over 33% to $137.8 million. Peeking forward, the company’s adjusted 2021 EPS figure is projected to climb another 42% higher, on 39% stronger revenue.