Offering a heavy counterpoint to the blue chips that dominate the headlines of The Wall Street Journal, the best tech stocks to buy for maximum returns represent a lesser-known category. Typically trading in the sphere of small-capitalization plays (basically anything south of $2 billion), enterprises that deliver bonkers rewards require patience and an iron will.
Let me be very blunt. The best tech stocks to buy of any category offer the potential of blistering gains. With digital innovations accelerating at breakneck speeds, this arena breeds speculative emotions. At the same time, no one knows what’s going to happen with these ideas. You can win big. But you can also lose big. Still, holding an industrial conglomerate for 30 years hoping that it will become relevant again might be the biggest risk of all. If you want to drive on the fast lane, check out these best tech stocks to buy for maximum returns.
Tech Stocks to Buy: Snap One (SNPO)
A lesser-known enterprise among tech stocks to buy, Snap One (NASDAQ:SNPO) nevertheless deserves closer attention. Designing, manufacturing and distributing smart solutions for homes and businesses, Snap One could gain relevance as social and workplace dynamics fully normalize. Since the beginning of this year, SNPO returned shareholders 30% of market value. In the past year, SNPO dipped about 8%.
Certainly, Snap One isn’t without challenges. Notably, its balance sheet could use some work, particularly its lowly cash-to-debt ratio of 0.06. As well, its Altman Z-Score sits at 1.28, indicating distress. Nevertheless, Snap One’s three-year revenue growth rate pings at 23.9%, ranked better than nearly 90% of the field.
Also, the market prices SNPO at 0.67-times trailing sales. As a discount to revenue, Snap One ranks better than 71.03% of the competition.
Finally, Wall Street analysts peg SNPO as a consensus moderate buy. Their average price target lands at $12.67, implying over 31% upside potential.
Tech Stocks to Buy: Yalla Group (YALA)
Based in the United Arab Emirates, Yalla Group (NYSE:YALA) operates a social networking and entertainment platform primarily in the Middle East and North Africa region. Per its public profile, it provides mobile applications, including Yalla, a voice-centric group chat platform, and Yalla Ludo, a casual gaming application. Since the Jan. opener, YALA gained 7% of market value.
In the trailing year, YALA gained over 5% and it could rise even higher. Unlike other speculative names among the best tech stocks to buy, Yalla features encouraging financials. For example, it commands a strong cash balance relative to debt. Operationally, the company’s three-year revenue growth rate clocks in at 25.9%, ranked better than nearly 82% of the software industry. Also, YALA trades at 1.4-times tangible book value. In contrast, the sector median stat is 3.61 times.
Lastly, nine months ago, Haitong analyst Natalie Wu pegged YALA a buy with a $5.50 price target. This implies upside potential of almost 40%.
Tech Stocks to Buy: Clearfield (CLFD)
Headquartered in Plymouth, Minnesota, Clearfield (NASDAQ:CLFD) manufactures and distributes passive connectivity products. Per its corporate profile, Clearfield’s fiber management and enclosure platform consolidates, distributes and protects fiber through inside plant facilities, to outside plant facilities, to the home, and to the drop-off points in between. Unfortunately, the market hasn’t been impressed with CLFD, with shares tumbling 59% since the Jan. opener.
In the past 365 days, CLFD gave up nearly 31% of equity value. Moreover, Gurufocus warns that Clearfield might be a possible value trap. Still, it’s also possible that the market could be overlooking a discounted opportunity among tech stocks to buy. For one thing, Clearfield commands excellent strengths in the balance sheet, particularly a robust cash account. Also, its three-year revenue growth rate clocks in at 45.5%, ranked better than 96.75% of its peers. As well, its book growth rate during the same period impresses at 24.8%.
In closing, analysts peg CLFD as a consensus moderate buy. Their average price target stands at $56.67, implying 50% upside potential.
Agora (API)
Hailing from Shanghai, China, Agora (NASDAQ:API) provides real-time voice and video engagement. It labels itself as the leading video, voice and live interactive streaming platform, helping developers deliver rich in-app experiences. However, like some of the risky names among tech stocks to buy, API hasn’t caught on with the market. Since the Jan. opener, API dropped 24% of equity value.
Financially, Agora presents a mixed bag. On the positive side, it carries a decently stable balance sheet. Its cash-to-debt ratio stands at 188.25, ranked better than 83.8% of the software industry. Also, its three-year revenue growth rate clocks in at 22.8%, above 79% of sector rivals.
However, the not-so-pleasant component involves operating and net margins sitting well into negative territory. Also, its three-year EBITDA growth rate prints much red ink. Still, Bank of America Securities’ Emerson Chan pegs API a buy. The expert’s price target hits $4.90, implying over 61% upside potential.
Veritone (VERI)
Based in Irvine, California, Veritone (NASDAQ:VERI) is an artificial intelligence tech company. Per its public profile, Veritone’s aiWARE technology and solutions are licensed and utilized by such industries as global media conglomerates, professional sports teams, federal government agencies, energy utilities, and state and local police departments. While VERI might be one of the best tech stocks to buy in terms of relevance, investors aren’t quite feeling right now.
Since the January opener, VERI gave up 23% of market value. In the trailing year, it’s down 49%. To be fair, the financials here represent a mixed bag. For one thing, Gurufocus warns that Veritone might be a possible value trap. Second, it suffers from a weak balance sheet. Its Altman Z-Score sits at 0.79 below zero, indicating distress and bankruptcy risk.
On the positive side, Veritone’s three-year revenue growth rate comes in at 22.2%, above 78.42% of its peers. Even with that performance, the market prices VERI at 1.07-times trailing sales, which is significantly undervalued. Overall, analysts peg VERI as a hold. However, their average price target lands at $6.60, implying nearly 64% upside potential.
Bandwidth (BAND)
Hailing from Raleigh, North Carolina, Bandwidth (NASDAQ:BAND) is a communications platform as a service company. It sells software applicating programming interfaces for voice and messaging, using its own IP voice network. Again, while it might rank as one of the best tech stocks to buy for relevance, the market has different ideas.
Since the Jan. opener, BAND fell nearly 51%. And in the trailing year, it’s down more than 48%. As with some of the other enterprises, Bandwidth presents a tricky financial picture. Here, Gurufocus labels BAND a possible value trap. Also, the company suffers from poor fiscal stability. In particular, its cash-to-debt ratio sits at a very lowly 0.29.
On the other hand, Bandwidth’s three-year revenue growth rate pings at 24%, above 79.91% of its peers. And the market prices BAND at a forward multiple of 8.27. In contrast, the sector median stat is 25.58 times. Lastly, analysts peg BAND as a consensus moderate buy. Their average price target comes in at $19.29, implying over 76% upside potential.
Ebix (EBIX)
Based in Georgia, Ebix (NASDAQ:EBIX) specializes in end-to-end convergence. In other words, it offers a complete suite of services with seamless data flow available to insurance channels around the world. While a utilitarian example of tech stocks to buy, EBIX has printed volatility in the charts. Since the Jan. opener, shares tumbled more than 10%. In the trailing one-year period, they’re down nearly 41%.
Again, investors wanting to enjoy maximum returns must accept some risk, leading to a mixed-bag financial profile for Ebix. To start with the negatives, Gurufocus labels the company a possible value trap. more critically, it suffers from a weak balance sheet. Specifically, its cash-to-debt ratio sits at 0.15, worse than 90.48% of sector rivals. On the plus side, Ebix’s three-year revenue growth rate is 21.6%, above 77.34% of its peers. Also, its trailing-year net margin is 5.22%, above 64.64%.
On a final note, analysts peg EBIX as a consensus moderate buy. Their average price target stands at $29.75, implying over 70% upside potential.
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.