The stock market continues to experience extremely volatile trading. However, the three main benchmark indexes have recovered, somewhat, on investors’ optimism surrounding some strong fourth-quarter earnings reports of technology companies. According to UBS chief investment officer for the Americas, Solita Marcelli, “Tech results, in particular, have been encouraging, highlighted by healthy demand from both businesses and consumers.”

The technology industry thrived over the past two years, and for some high quality stocks the momentum should continue, given the increased adoption of cloud and service-based IT across almost every sector. Moreover, with hybrid work structures becoming the new norm, reliance on technology is rising. According to Statista, Tech budgets in the United States are expected to expand by 6.7% in 2022, with software spending expected to be especially strong compared to other tech categories.

Given the long term growth prospects of the tech industry, Wall Street analysts expect low-priced tech stocks Compass, Inc. (COMP), Porch Group, Inc. (PRCH), indie Semiconductor, Inc. (INDI), and Allot Ltd. (ALLT) to rally more than 100% this year.

Compass, Inc. (COMP)

COMP provides real estate brokerage services. The company operates as a cloud-based platform that provides an integrated software suite for customer relationship management, marketing, client service, operations, other functionality, and brokerage and adjacent services in the real estate industry.

COMP announced several acquisition and expansion plans over the past year. In September 2021, COMP announced its acquisition of CommonGround Abstract, LLC, a leading title company serving Pennsylvania and New Jersey. In the same month, the company announced plans to acquire two title and escrow businesses, the Dallas-Fort Worth-based title company, LegacyTexas Title, and Denver-based First Alliance Title. These acquisitions should expand its title and escrow services portfolio. 

COMP’s revenue increased 46.7% year-over-year to $1.74 billion in the fiscal third quarter ended September 30. Its adjusted EBITDA grew 10.9% from the year-ago value to $12.20 million. In addition, its cash and cash equivalents came in at $791.40 million, indicating an improvement of 81.4% year-over-year for the nine months ended September 30. 

Street expects the company’s revenue to increase 72.7% year-over-year to $6.43 billion in the fiscal period ending December 2021. 

Of the six Wall Street analysts that have rated COMP, five rated it Buy, while one rated it Hold. The 12-month median price target of $18.00 indicates 124% potential upside. The price targets range from a low of $11.00 to a high of $24.00. 

Porch Group, Inc. (PRCH)

PRCH provides software and services under the ISN, HireAHelper, Kandela brands to home services companies, such as home inspectors, homebuyers and homeowners, insurance carriers, moving companies, security companies, and TV/internet providers, as well as offers moving concierge services. 

In January 2022, Homeowners of America (HOA), a property and casualty insurance provider and a subsidiary of PRCH, announced its service launch in Montana, marking HOA’s 14th state of operation. This is in line with HOA’s national expansion plan and should increase PRCH’s presence in the insurance industry.  

In December 2021, PRCH introduced its new Pay-At-Close module for home inspection companies to simultaneously make the payment processing experience smoother for homebuyers, agents, and inspectors. The program is available to some inspection companies, and a broad roll-out is expected to begin this year. This solution should be widely in demand and should garner significant returns. 

PRCH’s revenue increased 191.9% year-over-year to $62.77 million for the fiscal third quarter ended September 30. Also, for the nine months ended September 30, the cash and cash equivalents stood at $415.83 million, indicating an improvement of 5,010.4% year-over-year.

The consensus revenue estimate of $54.57 million for the fiscal fourth quarter ended December 2021 indicates an increase of 179.7% year-over-year. Its EPS is expected to improve 22.2% from its prior-year quarter. 

All of the seven Wall Street analysts that rated the stock have rated it Buy. The 12-month median price target of $28.29 indicates 210% potential upside. The price targets range from a low of $21.00 to a high of $34.00. 

indie Semiconductor, Inc. (INDI)

INDI operates as an automotive semiconductors and software solutions-based company. The company offers advanced driver assistance systems solutions, including light detection and ranging, connected car, user experience, and electrification applications.

Last month, INDI unveiled that it has created a Kabushiki Kaisha, or KK, and added some key resources in Tokyo. The company aims to strengthen its foothold in Japan, one of the largest global automotive markets. 

In December 2021, INDI launched the Surya™ LiDAR system-on-a-chip (SOC), enabling advanced driver assistance systems (ADAS) and autonomous driving functionality. This breakthrough development demonstrates its prowess in advancing architecture and should allow it to cash in on the fast-advancing lidar technology. 

INDI’s total revenue increased 60.3% year-over-year to $12.16 million in the fiscal third quarter ended September 30. Its non-GAAP gross profit stood at $5.23 million, up 33.3% from the prior-year quarter. 

The consensus revenue estimate of $21.53 million for the fiscal first quarter ending March 2022 indicates an increase of 165.4% year-over-year. Also, its revenue is expected to grow 172.3% year-over-year in the next quarter. 

Each of the three Wall Street analysts that have rated INDI rated it Buy. The 12-month median price target of $18.33 indicates 132% potential upside. The price targets range from a low of $16.00 to a high of $22.00. 

Allot Ltd. (ALLT)

Based in Hod-Hasharon, Israel, ALLT provides network intelligence and security solutions to protect and personalize the digital experience worldwide. The company offers Allot Service Gateway (Allot SG) platforms, including Allot SG-Tera, Allot SG9x000, Allot SG-VE, and CE for in-line deployment in traditional and virtualized network access infrastructure. 

Last month, ALLT announced that Entel, Peru’s innovative communication service provider, has launched the Allot NetworkSecure cybersecurity solution to protect the company’s mobile users against a broad range of cyber threats. Entel and ALLT will share recurring revenues generated by monthly service fees. Earlier, Play, the leading mobile operator in Poland, and Field Solutions Group (FSG), Australia’s leading rural, regional, and remote challenger telecommunications carrier, selected ALLT cybersecurity solutions to protect customers against cyber threats. Several other companies also chose ALLT’s security solutions over the past few months, reflecting ALLT’s dominance in the cybersecurity space. 

ALLT’s revenues increased 9.8% year-over-year to $38.16 million in the fiscal third quarter ended September 30, while its non-GAAP gross profit grew 11.9% from the year-ago value to $26.84 million. 

Analysts expect the company’s revenue to increase 4.1% year-over-year to $40.70 million for the fiscal fourth quarter ended December 2021. 

Of the four Wall Street analysts that have rated ALLT, three rated it Buy, while one rated it Hold. The 12-month median price target of $18.75 indicates 119% potential upside. The price targets range from a low of $14.00 to a high of $23.00.

COMP shares were trading at $7.99 per share on Thursday afternoon, down $0.32 (-3.85%). Year-to-date, COMP has declined -12.10%, versus a -5.64% rise in the benchmark S&P 500 index during the same period.

About the Author: Subhasree Kar

Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics. More...

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