The tech-heavy Nasdaq lost 340 points on October 4 due to a sell-off in large technology companies led by Facebook, Inc. (FB), which declined by more than 5%. Nevertheless, an anticipated stellar third-quarter earnings season could drive tech stocks higher.
Moreover, the demand for advanced technology-based products and services has increased dramatically amid the COVID-19 pandemic, and continues to rise thanks to the continuing digital transformation and remote work trend. According to a Forrester report, U.S. tech spending is expected to grow by 6% in 2021 and 6.8% in 2022. This bodes well for tech stocks.
So, we think it could be wise to bet on quality micro-cap tech stocks Computer Task Group, Incorporated (CTG), Issuer Direct Corporation (ISDR), and Socket Mobile, Inc. (SCKT). These companies are expected to generate significant returns in the coming months based on their promising product portfolios and continuing innovations.
Computer Task Group, Incorporated (CTG)
CTG in Buffalo, N.Y., together with its subsidiaries, provides information and technology services in North America, South America, Western Europe, and India. It provides business process transformation solutions, which include strategic advisory and data strategy, among others. It has a market capitalization of $121.70 million.
On July 29, Filip Gydé, CTG President and CEO, said, “Our focus continues to be on driving CTG’s digital transformation offerings and increasing the overall mix of higher value solutions revenue. The success of these efforts, coupled with our strategic plan to disengage from lower-margin staffing revenue, resulted in improvements in both gross and operating margins in the second quarter.” Also, the company secured a significant new contract for go-live Epic implementation with a U.S. client.
CTG’s revenue increased 3.4% year-over-year to $92.16 million for its fiscal second quarter, ended July 2, 2021. The company’s gross profit came in at $20.38 million, representing an 8.8% year-over-year rise. Its net income increased 4.2% year-over-year to $1.83 million, and its EPS remained flat at $0.12.
For its fiscal year 2022, analysts expect CTG’s revenue to be $398.64 million, representing a 4.4% year-over-year rise. The company’s EPS is expected to increase 28.3% year-over-year to $0.68 in its fiscal year 2022. In addition, it surpassed consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained more than 68% in price.
CTG’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
Also, the stock has an A grade for Value, and a B grade for Stability and Sentiment. Within the Technology – Services industry, it is ranked #3 of 74 stocks. Click here to see the additional POWR Ratings for Growth, Quality, and Momentum for CTG.
Issuer Direct Corporation (ISDR)
With a market capitalization of $97.60 million, ISDR in Raleigh, N.C., provides shareholder communications and compliance platforms, technologies, and services to public and private companies, law firms, brokerage firms, and investment banks. Its lead platform—Platform id—helps its customers manage and distribute their messages to constituents, investors, markets, and regulatory systems.
ISDR announced on August 3 that it had upgraded its ACCESSWIRE platform with its all-new subscription add-on Newsroom Suite. The company’s founder and CEO, Brian Balbirnie, said, “This suite of products is going to help our customers expand their storytelling process into a brand-building phase on our platform.”
For its fiscal second quarter, ended June 30, 2021, ISDR’s net revenue increased 17.1% year-over-year to $5.72 million. Its non-GAAP net income came in at $1.19 million, up 21.7% year-over-year. Also, its non-GAAP EPS increased 19.2% year-over-year to $0.31. Its EBITDA was $1.64 million, up 21.2% year-over-year.
ISDR’s revenue is expected to be $24.66 million in its fiscal year 2022, representing a 14.5% year-over-year rise. In addition, the company’s EPS is expected to increase 23.7% year-over-year to $0.99 in the current year. Also, it surpassed the Street’s EPS estimates in three of the trailing four quarters. Over the past year, the stock has gained close to 22% in price.
It’s no surprise that ISDR has an overall B rating, which equates to a Buy in our proprietary rating system. In addition, it has an A grade for Sentiment, and a B grade for Stability, Value, and Quality.
ISDR is ranked #7 in the Technology-Services industry. Click here to see ISDR’s ratings for Growth and Momentum also.
Socket Mobile, Inc. (SCKT)
SCKT produces data capture products for mobile applications used in business mobility markets internationally and has a $45.92 million market capitalization. The Newark, Calif.-based concern has a network of thousands of developers who use its software developer tools to add sophisticated data capture to their mobile applications.
On August 3, SCKT launched its upgrade for its SocketScan S740 Universal Barcode Scanner. Vanessa Lindsay, Senior Product Manager at SCKT, said, “These improvements position the S740 as an ideal option for the many POS/retail outlets that require age verification. For retail businesses that sell cannabis, alcohol, or tobacco, the S740 is an all-in-one scanning device, allowing workers to verify age and complete POS operations with a single device, minimizing the equipment needed.”
SCKT’s total revenues increased 119.3% year-over-year to $5.95 million in its fiscal second quarter, ended June 30, 2021. Its gross profit margin was $3.25 million, representing a 139.2% year-over-year rise. Its net income came in at $2.63 million compared to a $768,000 loss in the year-ago period. Also, its EPS was $0.27 compared to a $0.13 loss in the previous period.
Analysts expect SCKT’s revenue to grow 18% year-over-year to $26.36 million in its fiscal year 2022. In addition, the company’s EPS is expected to be $0.41 in the current year. Over the past year, the stock has gained more than 380% in price.
SCKT’s strong fundamentals are reflected in its POWR ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system.
In addition, it has an A grade for Sentiment, and a B grade for Value, Growth, and Quality. It is ranked #18 of 47 stocks in the Technology – Hardware industry. Click here to see the additional POWR Ratings for SCKT (Momentum and Stability).
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CTG shares were trading at $7.93 per share on Wednesday afternoon, up $0.03 (+0.38%). Year-to-date, CTG has gained 29.58%, versus a 17.54% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...
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