The U.S. Federal Reserve is not expected to increase interest rates until its goals of sustained 2% inflation and maximum employment are reached. In such a low-interest rate environment, small-cap technology stocks are expected to thrive thanks to their continued access to cheap capital. Furthermore, as rising Treasury yields on expectations of a fast-paced economic recovery are steepening the yield curve, there should be sufficient liquidity in the market, which bodes well for small-cap stocks.

Small-cap technology stocks are especially susceptible to borrowing rates since they require large amounts of capital to scale their operations. Given the ample liquidity in the market, many small-cap technology stocks are poised to grow significantly amid digital transformation and a growing global demand for technological solutions.

Super Micro Computer, Inc. (SMCI), Knowles Corporation (KN), Progress Software Corporation (PRGS), Methode Electronics, Inc. (MEI), and Plantronics, Inc. (PLT) are prominent players in their respective fields. Leveraging strong financials and the market’s favorable liquidity, these companies are innovating quickly to stay ahead of the game.

Super Micro Computer, Inc. (SMCI)

SMCI, a global leader in enterprise computing, storage, networking solutions, and green computing technology, develops, manufactures, and markets server solutions. The company also delivers motherboards, chassis, and accessories. SMCI has gained 81.6% over the past year to close yesterday’s trading session at $37.94.

SMCI recently announced the availability of the most complete server lineup in the industry  that supports  AMD EPYC™ 7003 Series Processors. The company’s SuperBlade delivered up to a 36% improvement over the 2nd Gen to 3rd Gen of AMD EPYC CPUs. Earlier this year, SMCI unveiled the industry’s first 64-core workstation.

For the fourth quarter, the company saw an increase in net sales of 8.9% compared to the same period last year. The company’s net income grew 16.6% during the same period.

SMCI is expected to see revenue growth of 6.3% for the quarter ended March 31, 2021 and 0.3% in 2021. The company’s EPS is estimated to grow 39.2% in 2022 and 10% per annum over the next five years.

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

It has an A grade for Sentiment and Value. In the B-rated Technology – Communications/Networking industry, it is ranked #13 of 54 stocks.

In total, we rate SMCI on eight different levels. Beyond what we’ve  stated above we have  also given SMCI grades for Growth, Stability, Momentum, and Quality. Get all the SMCI ratings here.

Knowles Corporation (KN)

KN supplies specialty components that have application in the mobile communications, medical technology, military, consumer electronics, and related sectors. The company also provides micro-acoustic solutions. KN’s stock price has increased 12.34% year-to-date and its last closing price was $20.79.

KN’s revenue is expected to grow 22.7% for the quarter ended March 31, 2021 and 12.6% in 2021. The company’s EPS is estimated to grow 98.4% in 2021 and at a rate of 15% per annum over the next five years.

For the quarter ended December 31,  the company’s net sales grew 4% percent compared to the same period last year. The company expects its first quarter revenues to increase 23% year-over-year.

KN  recently released a broad market development kit that  allows for quicker voice integration for Bluetooth devices. The new kit, called AISonic Bluetooth Standard Solution, helps in  building voice-activated calling, control, and speech recognition capabilities.

It’s no surprise that KN has an overall B rating, which equates to Buy in our POWR Ratings system. KN has a B grade for Growth. In the B-rated Technology – Electronics industry, it is ranked #20 of 42 stocks.

Click here to see the additional POWR Ratings for KN (Value, Momentum, Quality, Sentiment and Stability).

Progress Software Corporation (PRGS)

PRGS is a software company that is involved in the development and marketing of business applications. The company has global operations.

For the quarter ended February 28, 2020, the company saw an 11% increase in revenue compared to the same period last year. The company’s ARR (Annual Recurring Revenue) increased 22% during the same period.

The company  recently announced the launch of new updates to the Chef Enterprise Automation Stack, which focuses on making it a more integrated solution. The company has also launched Progress OpenEdge on AWS Cloud.

The company’s revenue may rise 15.2% in 2021, while its EPS may rise 10% during the same period. PRGS has returned 37.5% over the past year to close yesterday’s trading session at $43.71.

The POWR Ratings are also high on PRGS; it has an Overall A Rating, which translates to a Strong Buy. PRGS also has an A  grade for Value and Quality, and B for Sentiment. In the Software – Application industry, it is ranked #4 of 114 stocks.

Beyond what we stated above we also have given PRGS grades for Momentum, Growth, and Stability. Get all the PRGS ratings here.

Click here to check out our Software Industry Report for 2021

Methode Electronics, Inc. (MEI)

MEI manufactures and markets subsystem devices and components. The company has international operations.

MEI has been facing significant supply-chain issues caused by the spread of COVID-19.  However, the company has managed to meet the high-end of its revenue guidance for the last quarter.

For the quarter ended January 31,  the company’s net sales grew 3.3%. Electric and hybrid vehicle applications accounted for over 12% of net sales. MEI has gained 59.7% over the past year to close yesterday’s trading session at $42.04.

MEI is expected to see revenue growth of 35.2% for the quarter ended April 30, 2021 and 4.7% in 2021. Its  EPS is estimated to grow 97.6% in the quarter ended July 31, 2021 and 15% per annum over the next five years.

It’s no surprise that MEI has an overall B rating, which equates to Buy in our POWR Ratings system. MEI has a B grade for Sentiment, Quality, and Momentum. In the B-rated Technology – Electronics industry, it is ranked #8 of 42 stocks.

Click here to see the additional POWR Ratings for MEI (Growth, Value, and Stability).

Plantronics, Inc. (PLT)

PLT develops, manufactures, and markets communication headsets. The company has worldwide operations. It  recently rebranded to Poly. PLT’s stock price has increased 264.7% over the past year and its last closing price was $36.79.

PLT’s revenue is expected to grow 11.4% for the quarter ended March 31 and 0.8% in 2021. Its  EPS is estimated to grow 17.3% in 2021 and at a rate of 15% per annum over the next five years.

PLT  recently launched the Savi 7300 Office Series, which is the latest addition to its suite of Savi products. The company   also recently released the Poly Rove DECT IP phone, which is the world’s first phone  to feature Microban anti-bacterial technology.

For the quarter December 26, 2020, the company saw a 26.3%  increase in revenue versus  the same period last year. The company’s operating income was $29 million compared to the loss of $77 million from a year ago.

PLT’s strong fundamentals are reflected in its POWR Ratings. The stock has a B overall rating, which equates to Buy in our proprietary ratings system. PLT has a B grade for Value and Growth. In the B-rated Technology – Hardware industry, it is ranked #18 of 48 stocks.

Beyond what we stated above we also have given PLT grades for Momentum, Sentiment, Quality, and Stability. Get all the PLT ratings here.

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SMCI shares were trading at $38.94 per share on Wednesday afternoon, up $1.00 (+2.64%). Year-to-date, SMCI has gained 22.99%, versus a 6.63% rise in the benchmark S&P 500 index during the same period.

About the Author: Aaryaman Aashind

Aaryaman is an accomplished journalist that’s passionate about providing in-depth insights about investing and personal finance. Recently he has been focused on the stock market and he specializes in evaluating high-growth stocks. More...

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