5 Small-Cap Tech Plays on the Downswing that Analysts Love

Jacob Harper  |

Sometimes what the experts believe and what reality is doesn’t always jibe. The discrepancy can be especially wide in a sector like technology, where promises can float a stock seemingly indefinitely long after the market gets tired (see also: healthcare.)

But it would be cynical to assume that promises of a turnaround never come true. Sometimes the experts are onto something, and despite poor market performance a beaten-down stock can, actually, fulfill its lofty promises and make a comeback.  

We at Equities.com decided that it might be interesting to find some diamonds in rough. Specifically, we went looking for diamonds that have a little tarnish on them, and thus have been often overlooked.

In non-metaphorical terms, we sifted through spreadsheets to find the small-cap tech stocks that have had a rough go in 2013 but analysts think are strong buys.

Here’s the criteria we applied in our search:

1)      The tech stock has to be Small-Cap.

Small-cap stocks, with their low price and room for exponential growth, provide the best chance for a blockbuster buy.

2)      The stock is down at least 5 percent for the quarter.

For our diamonds in the rough, we wanted stocks that have been losing value, and not merely treading water (or, god forbid, actually making money.)

3)      The stock has an analyst consensus of “Strong buy.”

We wanted only the small-caps that analysts felt were the cream of the crop.

We found five small-cap tech stocks that have gotten a short shake from the market but analysts are still bullish on. They are:

ePlus Inc. (PLUS)

ePlus does tech support work for organizations, and touts themselves as being able to “optimize IT infrastructure and supply chain processes.” The company works in enterprise, healthcare, education, and in the public sector.

ePlus has been on a tear this year, gaining 484.44 percent on the year.

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Micrel Inc. (MCRL)

Founded in 1978, this semiconductor manufacturer has been on the market since 1994. The company has really hit their stride the last couple of years, posting profit beats six out of the last seven quarters.

Micrel has also exploded in 2013, gaining 414.21 since the beginning of the year.


Another semiconductor manufacturer, IXYS provides hardware parts for over 2500 different customer companies. Like Micrel, IXYS has a long history on the market, but has really hit their stride as of late, and has provided a nice return for stockholders the last two years.

While down from its lofty heights during the tech bubble, IXYS has had an exceptional return this year, gaining 200.86 percent.

Immersion Corporation (IMMR)

This San Jose, Cal.-based company creates haptic technology – otherwise known as tactile tech. Tactile tech uses vibrations to provide a different user experience for products. For instance, a Rumble Pack on a game controller.

Immersion has gotten beaten up this year, losing 45.25 percent of its value.

Tessera Technologies (TSRA)

Another San Jose-based company, Tessera works in miniaturization, specifically with semiconductors. It licenses its work out to several large corporations, and makes the memscam, the “smallest high-precision autofocus camera on the market.”

Tessera has gained 15.26 percent on the year.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not necessarily represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer.

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