With so much hype baked into compelling innovations such as artificial intelligence, it’s only natural that certain tech stocks exploded higher in the market. However, some of the bravado has been fading for the once-screaming-hot enterprises. As a result, those still interested in the innovation ecosystem should target underappreciated ideas.
Because of the dramatic rise of certain sector players, it might be difficult to envision that under-the-radar tech stocks are still available. However, if you’re willing to go off the beaten path – and by logical deduction accept a greater risk profile – you’ll find some enticing enterprises that just haven’t taken off this year.
Of course, that’s not always a great thing. At a time when investor sentiment rebounded from the doldrums one year ago, not attracting attention earlier isn’t exactly a “flex,” as the kids like to say. And to be sure, all of the ideas below are no higher than middle-capitalization entities (as in $10 billion).
In other words, you’re taking some huge risks. If you can handle that, these are the under-the-radar tech stocks to watch.
Tech Stocks: Marqeta (MQ)
A financial technology (fintech) specialist, Marqeta (NASDAQ:MQ) provides innovative card issuing and payment processing platforms. Primarily, the company allows its clients to issue, process, and manage payment cards. These include physical, virtual, and tokenized cards. As part of a new class of consumer-oriented businesses, Marqeta has several well-known and relevant entities as its clients.
Although leveraging a relevant offering, the company hasn’t attracted much attention on Wall Street. Since the start of the year, MQ slipped more than 9%, contrasting sharply with many other tech stocks. At the same time, investors may be overlooking its financial stability. Per Gurufocus, Marqeta’s cash-to-debt ratio clocks in at 128.18x, better than nearly 83% of its peers.
Also, insiders are acquiring shares in their own company. Per Fintel, two insiders bought up MQ stock in August this year. Lastly, analysts rate MQ a consensus moderate buy with a $6.60 price target, projecting growth of 24%.
An information technology (IT) and cybersecurity firm, Telos (NASDAQ:TLS) primarily serves government and enterprise-level clients. Per its public profile, Telos receives a large number of its contracts from the U.S. Department of Defense. Given the hot geopolitical environment, that’s not a bad piece of contractual leverage. Basically, cybersecurity will likely be a top priority for critical federal agencies, keeping Telos in the mix.
Also, the devastation done to Clorox (NYSE:CLX) in the private sector reveals the horrible impact of cyber breaches. Recently, I’ve encountered some pushback on my X account regarding the actual figures associated with cybercrime. Fundamentally, though, the main takeaway is that nefarious actors will likely not cease their harmful endeavors. So, TLS may be on solid ground.
Unfortunately, TLS also lost 56% of its equity value so it’s a massive risk. Still, it could be one of the under-the-radar tech stocks to watch for speculators. Analysts peg TLS as a moderate buy with a $3.38 target, implying over 48% growth.
Tech Stocks: Wolfspeed (WOLF)
A developer and manufacturer of wide-bandgap (WBG) semiconductors, Wolfspeed (NYSE:WOLF) presents an intriguing case for tech stocks to watch. According to the U.S. Department of Energy, WBG semiconductor materials “allow power electronic components to be smaller, faster, more reliable, and more efficient than their silicon (Si)-based counterparts.”
Why is that important? Per the federal agency, “These capabilities make it possible to reduce weight, volume, and life-cycle costs in a wide range of power applications. Harnessing these capabilities can lead to dramatic energy savings in industrial processing and consumer appliances, accelerate the widespread use of electric vehicles and fuel cells, and help integrate renewable energy onto the electric grid.”
I’d say those are quite enticing attributes. However, the market thinks otherwise, sending WOLF down nearly 54% since the January opener. Still, to add confidence, insiders have been buying up shares since August last year. Analysts rate WOLF a moderate buy with a $51.43 target, implying 65% upside potential.
Billed as a leading curated platform for live online learning, Nerdy (NYSE:NRDY) may be best described as an educational technology (ed-tech) enterprise. Per its website, Nerdy also deploys a purpose-built AI platform to unlock greater learning capabilities across over 3,000 subjects. From an academic perspective, it’s vital that the U.S. pick up the pace. After all, our rivals aren’t going to wait for us.
Moreover, leveraging AI for learning combines the best of both worlds in terms of the present ultra-low-level singularity; that is, machine learning might never reach the point where it completely replaces human intuition and immediate responses. Put another way, people will still need to be educated to respond to various stimuli. It’s just that with AI, that learning curve may be shortened.
While investors love NRDY – sending it up nearly 43% year-to-date – it also slipped 8% in the trailing five sessions. Still, I think it’s one of the under-the-radar tech stocks to watch thanks to its no-debt balance sheet. Also, analysts rate NRDY a strong buy with a $5.75 target, implying nearly 80% growth.
Tech Stocks: Lantronix (LTRX)
Headquartered in Irvine, California, Lantronix (NASDAQ:LTRX) specializes in innovative products and solutions across a range of relevant industries. For example, regarding smart cities and utilities, Lantronix’s Internet-of-Things (IoT) network enables businesses and infrastructural entities to make better decisions based on real-time information. Also, the company leverages its IoT expertise in traditional industries, such as consumer retail.
Although relevant, LTRX doesn’t get on the radar as much due to its low market cap. At only $156.4 million at the time of writing, not too many folks cover it. As a result, LTRX is down about 3% since the beginning of the year. Still, that also makes shares an enticing candidate for underappreciated tech stocks to watch.
Despite some shaky financial metrics, Lantronix clocks in an impressive three-year revenue growth rate of 15.2%. That’s above nearly 79% of its peers. Also, the company enjoyed insider buying in September.
Significantly, analysts peg LTRX as a unanimous strong buy with a $9.75 target, projecting 132% upside.
A multinational tech company, Vuzix (NASDAQ:VUZI) supplies wearable display technology. As well, it specializes in virtual reality (VR) and augmented reality (AR). Per its public profile, Vuzix’s display devices are used for mobile and immersive AR applications. According to Precedence Research, the global wearable tech market may reach a valuation of $491.74 billion by 2032.
Back in 2022, the research firm stated that the sector hit a valuation of $138 billion. Therefore, experts project that the compound annual growth rate (CAGR) will be 13.6%. That should be music to VUZI’s shareholders. Unfortunately, the market doesn’t quite think so. Since the January opener, the security dipped more than 14%. Just in the trailing month, it lost 11%.
Nevertheless, the biggest supporters of VUZI as one of the under-the-radar tech stocks to watch are its own insiders. Per Fintel, those closest to the business have been buying up shares since December 2021. Also, analysts rate VUZI as a moderate buy with a $7.50 target, implying nearly 143% growth.
A tricky endeavor among micro-cap tech stocks – and thus probably the riskiest idea here – Skillsoft (NYSE:SKIL) will likely require patience and nerves of steel. Headquartered in Nashua, New Hampshire, Skillsoft is a cloud-based learning solutions platform for global enterprises, government agencies, education organizations, and small-to-medium-sized businesses. Primarily, it provides various leadership and technical skills, keeping fiduciaries competitive.
To be sure, the difficulty in assessing Skillsoft centers on the present environment. With companies still laying off workers, cutting consultation services may be a tempting place to start. At the same time, hurting companies will also need an edge to remain above the competition. Further, employees will be eager to absorb new skills, knowing that not being relevant could lead to an axing.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.