4 Small & Mid-Cap Israeli Tech Stocks With Upside Potential

Michael Teague  |

Israel’s tech industry is one of the most promising aspects of the country’s economy. Israeli tech companies work on products that matter, and in an environment that is very supportive of research and development.

The University of Pittsburgh’s Katz Graduate School of Business certainly seems to agree with this claim. A social entrepreneurship class at Katz recently sent three MBAs along with their professor to the Eastern Mediterranean nation to do research on the country’s startup culture, and the results were encouraging enough that another 20 to 25 students will make the same trip next spring.

Companies such as Facebook (FB) and Google (GOOG) seem to concur as well, at least according to some of the acquisitions both companies have made over the past year.

In June of last year, Facebook acquired an Israeli tech startup called face.com, a small firm that develops facial recognition technology. The social media site, thanks to its more than one billion users, has come to host one of the largest collections of photographs in the world and it is not hard to imagine how facial recognition programs could help it increase its share of ad revenue

Facebook also attempted to purchase the Israeli tech startup Waze, a company that has developed an app whose nearly 50 million users participate in providing more precise and timely driving directions, as well as updates about road closures and traffic. Facebook was willing to spend upwards of $800 million to purchase the company, until Google swooped in at the last minute with an offer of some $1.1 billion. To give some perspective, only a few months earlier, Apple Inc. (AAPL) was reported to have been offering around $600 million for the company.  

The following small and mid-cap Israeli tech stocks were selected based on positive year-to-date and year performance, as well as for the relatively small percentage of their stock that is being sold short (under 5 percent). Growth stocks such as those typically found in the tech industry are often the target of short-selling, particularly when investors feel as though a particular company has become oversold. In contrast, a low short float could be an indication that a company has significant upside potential.

Furthermore, all four of these stocks have an average analyst rating of “buy or better”:

Check Point Software Technologies (CHKP) – The internet security company has a market cap of $9.92 billion, with shares currently trading for $50, up 5 percent in 2013 and just shy of 1 percent over the past twelve months. Currently only 3 percent of the company’s shares are being sold short.

NICE Systems Ltd. (NICE) – NICE Systems is an internet security provider and data analysis firm that works with both governments and businesses. The company has a market cap of $2.21 billion, with shares currently trading for $36.64m up 10 percent in 2013, and 0.5 percent over the past 12 months. Currently only 0.5 percent of the company’s available shares are being sold short.

Partner Communications Company Ltd. (PTNR) – Partner communications is a wireless company with a market cap of $970.3 million, with shares currently trading for $6.26, up 4.7 percent in 2013 and 65 percent over the past 12 months. Currently 0.14 percent of the company’s shares are being short-sold.

Orbotech Ltd. (ORBK) – Orbotech is an electronics firm that develops optical inspection equipment for security purposes. The company’s market cap is $536.31 million, with shares trading for $12.38, up 46 percent year-to-date, and just over 47 percent over the past 12 months. Currently, 0.1 percent of the company’s available shares are being short-sold.

Stock price data is provided by IEX Cloud on a 15-minute delayed basis. Chart price data is provided by TradingView on a 15-minute delayed basis.

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