Market Overview

Tech Stocks To Watch Closely

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Tech Stocks To Watch Closely
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Technology is a sector that houses some of the biggest investment opportunities ever seen. In fact, outside of the banking industry, more tech companies are among the 50 largest companies in the world by market cap than any other industry, with companies like Apple Inc (NASDAQ: AAPL), Amazon.com, Inc. (NASDAQ: AMZN), Alphabet Inc (NASDAQ: GOOG), and Microsoft Corporation (NASDAQ: MSFT) leading the charge.

At the end of the day, as technological innovation changes the way that we do just about everything, investment opportunities emerge. Here are stocks that I believe represent some of the largest opportunities in tech...

 

Advanced Micro Devices: A Key Challenger To Intel

Advanced Micro Devices, Inc (NASDAQ: AMD), also known as AMD, is a relatively large company, but when compared to the biggest players on the field, it’s more like a minnow swimming in a shark tank. Nonetheless, the company has the potential to become a monster, and as it continues to take market share from Intel Corporation (NASDAQ: INTC), it continues to drive value.

AMD focuses on the development, manufacturing, and sale of next-level memory and storage devices, including microchips and processors. The company’s products are commonly used in gaming, cryptocurrency mining, and several other applications that require high-level abilities from computers, servers, and like devices.

The company’s flagship product lines are known as Ryzen and Epyc. These lines have quickly become viewed as leadership products and are helping the company challenge Intel, the current market leader.

Interestingly, between the first quarters of 2018 and 2019, AMD’s Ryzen saw a dramatic rise in market share with regard to x86 desktop units, climbing from 12.2% to 17.1%. During the same period, the company’s x86 notebook unit also saw a dramatic rise in market share from 8% to 13.1%. Also during this period, blues struck Intel, leading to dramatic declines in market share.

The bottom line here is that AMD’s innovation is leading to strong growth within its target market. Should this innovation continue, the sky’s the limit when it comes to value growth ahead.

 

NXP Semiconductors (NXPI): A Good Buy On Weakness

NXP Semiconductors (NASDAQ: NXPI) has seen strong growth in the market over the past six months or so, and chances are that this growth isn’t going to slow anytime soon. In fact, due to an acquisition deal falling through, the company’s stock is trading at about 14 multiples of expected 2019 earnings, making it a highly undervalued play in a very large market.

The undervaluation started when Qualcomm’s (NASDAQ: QCOM) deal to acquire the company at about $47 billion fell through. Unfortunately, regulatory authorities in China shot down the deal, sending NXP Semiconductors spiralling down.

The company has a stronghold on the semiconductor market, especially in the mobility and security spaces. Its products are often found in smartphones, smart homes, industrial automation, smart city automation, and more.
While the company already has a stronghold on the industry, that doesn’t mean that the industry is saturated. In fact, NXPI is benefiting from the rapidly growing use of connected devices across a wide range of sectors.

With an already pronounced leadership position in smart technology, recent weakness due to China shooting down the Qualcomm deal, and a price-to-earnings ratio that’s hard to ignore, I believe that NXP Semiconductors has plenty of room for growth ahead.

 

Mogo (MOGO): An Emerging FinTechBringing Financial Health To Canadian Millennials

The Canadian banking industry is very different from what we see at home in the United States. The industry is dominated by a few massive players. Unfortunately, the big bank domination leads to a convoluted process and high banking fees. Mogo Inc (NASDAQ: MOGO) is looking to throw a wrench in this industry and is doing a great job at executing on these plans.

Founded in 2003, Mogo is considered one of the pioneers in the global FinTech space. The company’s mobile app gives consumers access to a Mogo Visa debit card and a digital spending account. This allows users to control their spending by category and easily create a realistic budget for free.

The app also gives consumers a way to invest their money, monitor and protect their credit and identification from fraud, and get access to smart credit solutions. Importantly, the app is completely free to users. The only time users pay is when they use a service that comes with a fee or upgrade to one of their premium subscription products. 
Perhaps, this is why Mogo has built a following of more than 800,000 users and continues to grow at a rapid rate. In fact, analysts expect that the company will see users grow to more than one and a half million within the next few years.

On the topic of analysts, the stock is covered by six well-respected firms. Interestingly all analysts that have rated the stock have rated it with a buy, many of which coupled strong buy ratings with a price target suggesting gains in multiples.

Recently, Mogo completed a merger with Difference Capital, adding around $30 million in cash and monetizable assets to its balance sheet - assets which it is already beginning to monetize. The financial strength provided through this transaction, coupled with the company’s leadership position in a growing Canadian FinTech market and continued innovation which will likely keep it on top, makes this a stock that’s well worth paying attention to.

 

Himax Technologies (HIMX): A Compelling Opportunity In Display Semiconductors

Himax Technologies (NASDAQ: HIMX) is a semiconductor company with a focus on image-related technologies. The company creates semiconductors for touch screen displays, microdisplays like smart glasses and VR goggles, images sensors for cameras, and more.

All in all, there are several areas where Himax could potentially climb to the top, and do so relatively quickly. First and foremost, its CMOS image sensor business is a promising one. As the world looks for better ways to secure and protect arenas, airports, train stations, and more, Himax may be working on the solution.

In fact, the company is working on a machine-vision sensor product line with Emza at the moment. Essentially, machine vision gives an automated way to detect threats in these areas, and considering the market at the moment, demand for its WiseEye AIoT intelligent vision solution could see momentum.

There’s also promise in the LCoS business, which is being used in Google’s AR device. While the device from Google may not generate significant revenue for a few years, the product is slated to be met with high demand and gives the company the ability to boost margins in the long run.

Finally, the company’s 3D sensing arm could see strong demand as smartphone manufacturers look to include the latest and greatest technologies in their upcoming product launches.

Considering these key areas and the market potential that each one represents, Himax could see strong long-run growth ahead. So, keep your eyes peeled.

 

CleanSpark (CLSK): Green Energy With Incredible Potential

Finally, we have CleanSpark (OTCMKTS: CLSK). The company’s claim to fame is its microgrid technology that is designed to disrupt the current energy infrastructure in the United States and other developed nations.

The company handles the design, build, and maintenance of its microgrid products, while providing all hardware needed. However, for me, the most interesting part of the business is the high-margin software business.

CleanSpark offers two software solutions. The first, known as mVSOTM was developed as a tool used by enterprise customers when making strategic energy-related decisions. The software outlines opportunities through a wide range of energy markets while testing business models and performance under regulatory constraints. This ultimately allows the user to make smart energy investment decisions.

The second software solution, mPULSETM is a program that works to optimize energy assets, maximizing cost efficiency. Essentially, the software orchestrates the operation of energy assets, coordinating with electric loads and the utility to maximize energy savings and reduce CO2. The program also assists in finding opportunities to purchase power during low cost time for use during peak hours.

Interestingly, CleanSpark recently announced an entrance in the cannabis industry. In fact, the company said that it had entered agreements with two thought leaders in the cannabis space who will educate growers on smart energy use and the cost efficiency that comes along with a microgrid provided by CleanSpark.

All in all, with a long list of enterprise customers, growing contractual backlog, and a green solution at a time when green is the new black, CleanSpark is a stock that’s well worth paying attention to.

 

The Takeaway

The takeaway here is simple. Since the ‘90’s, technology has been a sector that has driven incredible investor interest and yielded strong gains for those that have made the right moves in the space. While there are several leaders in tech, there are up and comers that offer strong investment opportunities as well. In my view, those listed above represent some of these opportunities.

 

Image sourced from Pixabay

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