It’s no question that tech stocks represent some of the world’s biggest companies. As our world and everyday lives are only becoming more and more tech dependent, this trend is likely to continue.
Many of these stocks have been massive wealth generators over the years, with conquering household names such as Apple, Microsoft, and Amazon providing investors with incredible returns. But of course, there are other opportunities for the observant investor. The question is, where to find them?
TipRanks’ set of unique tools is a sure-fire way to get on the right path. For example, the Stock Screener lets you filter your search results by price target upside, analyst consensus and sector so you can focus on only the most compelling investments.
So, we rolled up our virtual sleeves and rummaged around to find 3 tech stocks set for gains ahead, specifically ones which currently have the Street’s undivided support. We mean to say that each has racked up only bullish recommendations in the last three months, making the consensus rating a unanimous “Strong Buy.”
Upland Software (UPLD)
Enterprise software wiz, Upland, has been on a bit of a shopping spree. This year includes the 1H19 acquisitions of PostUp and Kapost, totaling $80 million. These were followed by the purchase of CIMPL for $23.1 million, and more recently the acquisitions of InGenius ($26.4 million) and the largest one to date, Altify ($84 million). An organic growth strategy is simply not the Upland way.
The ever-expanding tech company also recently announced a new $190 million incremental loan which will go towards paying off its existing revolving credit facility, and yes, to fund more acquisitions.
Craig-Hallum’s Jeff Van Rhee thinks “the Upland flywheel is in motion,” with the 5-star analyst adding, “This team is flat out executing and the model has legs for many years to come. Acquisitions are getting more strategic and cohesive product sets are emerging, particularly around customer care/customer engagement, a space we spend a lot of time covering and one that has improving tailwinds… We continue to believe this team will create substantial shareholder value near, intermediate, and long-term.”
It’s no wonder, then, that Van Rhee’s call on UPLD remains a Buy. The 5-star analyst’s price target of $59 is set to provide excellent gains of 63% should it materialize.
The analyst’s optimism is mirrored by that of the Street, as a full house of 5 Buys amongst the analysts tracked over the last 3 months gives UPLD a Strong Buy consensus rating. The average target price of $51.20 provides investors with upside potential of 41% from the price the stock is currently trading at.
Verint Systems (VRNT)
A recent report by Accenture highlighted that cybercrime is poised to account for over $5 trillion of economic value over the next few years. Therefore, companies are set to be spending large chunks on services which provide IT security. The sector is a growing one, with innovative platforms emerging. Verint is one such platform with a two-pronged approach: cybersecurity and customer engagement management.
The tech company is in the middle of a transition in both of its segments, moving to a cloud first strategy in the customer engagement segment, while also shifting away from a model that combines hardware and software to one whose sole focus is on selling software directly to customers.
Needham’s Ryan MacDonald thinks the company is trading at a discount, noting, “Verint is still in the early innings of its model transition, which creates the potential for volatility in quarterly results. Given VRNT's discounted EV/EBITDA valuation of 8.8x our FY21 estimate, we believe the transition risk is priced into the stock, creating an attractive risk/reward profile for investors.”
To this end, the 5-star analyst initiated coverage with a Buy rating and set a price target of $53.
Another analyst throwing in the hat is Goldman Sachs’ Brian Essex, who wrote, “While the company has been able to deliver modest growth and profitability, the stock continues to trade at a meaningful discount to peers with similar fundamental profiles. We view the company well positioned to deliver ongoing growth and margin expansion and believe more consistent execution, more granular reporting, and an improvement in investor awareness will enable the stock to re-rate higher over time.”
Essex’s Buy rating goes along with a price target of $58, putting the upside potential at 12%.
The Street is on the same page in regards to the cybersecurity firm, as a Strong Buy analyst consensus for VRNT breaks down into a unanimous 5 Buys. The average price target of $62.40 provides a possible 21% increase from its current price.
Avalara (AVLR)
It’s very hard to make anything to do with taxes sound remotely sexy, but at least Avalara humorously acknowledges this. On the tax compliance software provider’s website, the company describes itself as “disrupting the status quo in the ‘scintillating’ world of sales tax management since 2004.”
It seems like the disruption, though, is bearing fruit. Avalara recently posted another strong quarterly report, with 42% subscription revenue growth (in line with the 42% last quarter), 38% calculated billings growth (near enough to the 41% growth last quarter despite harder comp), and 113% net revenue retention, the best in the company’s public history. It was also the 7th consecutive quarter of accelerating core customer additions.
J.P. Morgan’s Sterling Auty smells opportunity, noting, “It was another impressive quarter with over 800 new customers added driving 6% upside in revenue and a significant margin beat. The tone on international growth and the new marketplace opportunities we believe add legs to the growth outlook as both can provide incremental opportunities beyond just what we have seen so far with the Wayfair decision. We think the stock still has room to move higher driven by these secular growth factors and a valuation that is below many other premium names.”
Therefore, the 5-star analyst reiterated his Overweight rating on AVLR, along with a price target of $104, implying nice upside potential of 38%.
All in all, the 6 analysts tracked by TipRanks over the last 3 months all rate the taxman disruptor as a Buy, giving the stock a Strong Buy analyst consensus. The average stock-price forecast is $97.17, indicating gains of 29% could be in the cards.
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