2 Small-Cap Tech Stocks With Significant Upside Potential

NYSE: ATEN | A10 Networks, Inc.  News, Ratings, and Charts

ATEN – After a considerable rally in large-cap tech stocks over the past year, lesser-known small-cap tech companies such as A10 Networks (ATEN) and Aviat Networks (AVNW) could hold higher upside potential. As the tech boom is expected to continue in 2021, these companies could reach new highs.

The tech industry, one of the biggest beneficiaries of the coronavirus pandemic, reached new highs over the past year. Industry giants such as Amazon.com, Inc. (AMZN), Apple, Inc. (AAPL), and Facebook, Inc. (FB) delivered significant returns in 2020, given their massive market dominance. So it’s no surprise the Vanguard Information Technology ETF (VGT) gained 37.8% over the past year versus the SPDR S&P 500 Trust ETF’s (SPY) 16.1% returns. 

However, the industry leaders are currently facing antitrust allegations from the federal government, raising concerns regarding their operational efficacy in the future. With the tech boom still continuing as the world adapts a virtual lifestyle, lesser-known tech companies are actively making efforts to capitalize on the situation through business expansion and hefty investments in research and development. 

Thus, stocks like A10 Networks, Inc. (ATEN) and Aviat Networks, Inc. (AVNW) that have significant growth potential could deliver better returns than the industry leaders in the upcoming months.

A10 Networks, Inc. (ATEN)

ATEN is a provider of software and hardware solutions. The company’s solutions enable its customers to secure and optimize the performance of their data center and cloud applications, and secure their users, applications and infrastructure from Internet, Web and network threats at scale. ATEN’s portfolio consists of six application delivery and security products, including Application Delivery Controllers (ADC), Lightning Application Delivery Service (Lightning ADS), Carrier Grade Network Address Translation (CGN), Threat Protection System (TPS), SSL Insight (SSLi) and Convergent Firewall (CFW).

On February 19, 2021 ATEN announced several of its infrastructure measures in order to fight against emerging security threats. For example, the company’s DDoS protection solution is mitigating the threat of in-line attacks allowing its gaming users to reliably access the services. Also, a European telecom provider is building a DDoS cloud scrubbing center, with ATEN’s DDoS protection solution to offer mitigation services for its enterprise customers. The company also announced a set of solutions in June 2020 that deliver application security and availability for customers who are increasingly facing the operational and security complexities of hybrid-cloud infrastructures.

ATEN’s total revenue increased 3.9% year-over-year to $62.66 million for the fourth quarter ended December 31, 2020. Revenue from the Products segment increased 2.4% year-over-year to $37.74 million and revenue from Services segment increased 6.2% year-over-year. Non-GAAP net income of $13.92 million reported during the fourth quarter represents an improvement of nearly 79% year-over-year. Non-GAAP EPS increased 80% year-over-year to $0.18.

The consensus EPS estimate of $0.11 for the quarter ending March 31, 2021 represents an improvement of 120% year-over-year. Moreover, ATEN has surpassed the consensus EPS estimates in each of the trailing four quarters, which is impressive. The consensus revenue estimate of $56.63 million for the quarter ending June 30, 2021 represents a 8.7% rise on a year-over-year basis.

The stock has gained 28% over the past year and closed today’s trading session at $9.40.

ATEN’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

The stock has a grade of A for Quality and B for Growth and Value. We have also graded ATEN for Sentiment, Stability and Momentum. Click Here to access all of ATEN’s ratings.

ATEN is ranked #4 of 56 stocks in the B-rated Technology – Communication/Networking industry.

Aviat Networks, Inc. (AVNW)

Headquartered in Austin, Texas AVNW designs, manufactures, and sells a range of wireless networking products, solutions, and services. The company’s products include broadband wireless access base stations and customer premises equipment for fixed and mobile networks, and point-to-point digital microwave radio systems for access, backhaul, trunking, and license-exempt applications. The company sells products and services directly to its customers and also uses agents and resellers.

On February 16, 2021 AVNW announced that LTD Broadband, an internet service provider (ISP) and top recipient in the US government’s Rural Digital Opportunity Fund (RDOF) auction will deploy AVNW’s WTM 4000 microwave and multi-band platform systems in its network middle mile and for fiber redundancy. AVNW announced on December 2, 2020 that Nextlink Internet which is an ISP delivering high-speed connectivity to commercial and residential subscribers is extending its fiber backbone utilizing the AVNW’s WTM 4000 microwave and multi-band platform.

AVNW’s total revenues increased nearly 26% year-over-year to $70.53 million for the fiscal 2021 second quarter ended January 1, 2021. Revenue from product sales increased 36.7% year-over-year to $46.69 million while revenue from services increased 9.1% year-over-year. Net income was reported to be $6.64 million in comparison to the net loss reported in the fiscal 2020 second quarter (ended December 27, 2019). Non-GAAP EPS increased 19.4% sequentially to $1.48.

The consensus EPS estimate of $0.73 for the quarter ending March 31, 2021 represents an improvement of 87.2% year-over-year. Moreover, AVNW has surpassed the consensus EPS estimates in each of the trailing four quarters, which is impressive. The consensus revenue estimate of $262.91 million for the fiscal 2021 represents an 10.2% year-over-year rise from the year ago period.

The stock has gained 378% over the past year and closed today’s trading session at $63.74.

AVNW’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to Strong Buy in our proprietary rating system.

The stock has a grade of A for Growth, Value and Sentiment as well and B for Quality. We have also graded AVNW for Stability and Momentum. Click Here to access all of AVNW’s ratings.

AVNW is ranked #1 in the Technology – Communication/Networking industry.

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ATEN shares rose $0.06 (+0.64%) in after-hours trading Tuesday. Year-to-date, ATEN has declined -5.38%, versus a 3.64% rise in the benchmark S&P 500 index during the same period.


About the Author: Sweta Vijayan


Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More...


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