American Microcap Tech Stocks Poised for a Turnaround

Jacob Harper  |

Warren Buffett famously warned, “beware of past performance proofs in finance. If history books were the key to riches, the Forbes 400 would consist of librarians.” But still, investors are often shy of getting into stocks that have done poorly.

Because investors like growth, often uninterrupted growth, and a bad year, bad half, or even just a bad month keeps potential investors away, even if the future looks rosy. That red number next to “return” serves as an unwarranted flag to many a player, who feel if a company has been shedding value, they’ve proven themselves to be a money pit and thus will probably continue to be one going forward.

The American tech industry is in a renaissance right now, and there are tech plays that don’t get the attention they deserve because they’ve had a down year. And according to the experts, there are several that could be a solid investment opportunity for an investor looking for the Next Big Thing in tech.

To find our underappreciated tech plays, we applied four filters to all the tech stocks available for investment in the American market:

1)      Must be a microcap

Microcaps, or companies worth less than $300 million, usually get much less attention than their larger counterparts.

2)      Must be down for the year

We wanted to find companies that had experienced a loss of valuation for 2013. This is especially telling in a fiscal year that has seen such a monumental gain.

3)      Must have an analyst consensus of “strong buy” or better

In looking for underappreciated tech plays, we wanted to find the ones that weren’t just losers on the year, but ones that analysts gave the highest possible rating to.

Using these filters, we found four American tech stocks that are poised for a turnaround. They are:

MeetMe, Inc. (MEET) As opposed to social media companies like Facebook Inc. (FB) that rely more often on facilitating connections between people who already know each other, Meet Me is a social media company that introduces strangers.

Towerstream Corporation (TWER) This wireless 4G service provider mainly services the commercial sector. The Rhode Island-based Towerstream first went public in 2007.

Zygo Corporation (ZIGO) The Costa Mesa-headquartered Zygo makes microscopes, laser interferometers, and other products associated with the field of optical metrology.

ID Systems Inc. (IDSY) This tech company manufactures tracking products and wireless monitoring systems.

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DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not necessarily represent the views of 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:

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