​Five Small- and Micro-Cap Tech Stocks for Under $5

Joel Anderson  |

Frequently, trading stocks can be a difficult thing to get started doing. For many Americans, the lesson that investing is important comes through loud and clear, but finding the money to get started isn’t easy. Particularly when share prices for many stocks make it prohibitively expense to purchase even a single share. When a single share of Alphabet (GOOG) is trading hands at more than $750 or a single share of Amazon.com (AMZN) goes for nearly $600, retail investors frequently find that buying even a small slice of the new generation of tech will be outside their budget.

However, for an investor looking to start investing in tech stocks but looking to take some smaller bites out of the gate, there are still options. There are plenty of smaller tech firms that have shown solid growth and real promise while also featuring a share price of under $5, the sort of level that can mean even a small-time investor can get started and even do a little diversification without breaking the bank.

The following five tech stocks each have a share price under $5, have shown sales growth in excess of 25% over the last five years, and sales growth of more than 25% quarter-over-quarter. Certainly, delving into the realm of small-cap tech stocks is one that carries a lot of risk, but at $5 a share or less, plenty of investors may be more than willing to roll the dice.

MeetMe (MEET)

Market Cap: $139.54 million

Share Price: $2.20

MeetMe is a location-based social media service that connects new people with each other. Boasting nearly 5 million unique users, the site has a wide variety of ways to connect people based on their location and shared interests. It also offers an array of options for mobile and online advertising that uses a variety of different formats and locations to target users.

So far, 2016 hasn’t been great to MeetMe, with the stock shedding just over 20% of its value in the midst of a clear downtrend. That said, this was during a larger market downturn, meaning it may have more to do with investors shifting to a risk-off environment and shedding the small-cap social media stock in the process. When you look at the fundamentals, there’s a lot to like about MeetMe.

For starters, the company swung to profitability last year and guidance shows it building on those gains in 2016. Revenue has grown steadily, or at least it would have if it hadn’t spiked over $45 million in 2012 before pulling back in line with its longer-term growth trends. The company’s carrying very little debt, boasts a quick and current ratio of 4.8, and its forward P/E ratio is under 9.

All told, if you’re looking for a social media play, MeetMe appears to be one that’s just now combining its continued growth in revenue with profitability. If you like what you see, the recent downswing could make for a buying opportunity, especially as it’s trading near a support level that dates back to November.

Neonode (NEON)

Market Cap: $88.52 million

Share Price: $2.05

Neonode develops optical infrared touch technology for user interfaces, including the ability to sense the depth, distance, velocity, and pressure of an object. The technology has a range of applications, from tablets and laptops to wearable tech or toys.

The company recently experienced a pretty big 2015, cutting loses and growing revenue considerably. That said, the stock has been declining steadily for almost a year, losing more than a third of its value in that time and currently sitting more than 50% below its 52-week high.

However, things appear to be turning around with a forward P/E at 6.48 and gross margins currently sitting north of 65%. Neonode also released a product in December called the AirBar that allows users to essentially turn a normal laptop into a touchscreen.

Plug Power (PLUG)

Market Cap: $385.81 million

Share Price: $2.07

Plug Power is a company with a long, long history. It was founded in 1997 and, no matter how much you like the stock today, it seems pretty unlikely it will ever return to the heights it experienced in its earliest days. The company’s worth a tiny fraction of what it was then. Even as recently as 2014, Plug Power traded hands at over $8.

Today? Not so much. The company makes hydrogen fuel cells that can replace batteries on electric vehicles like forklifts. You would be crazy to completely ignore the long and troubled history of this company, but there does seem to be real reason to think they’ve turned it around of late.

Revenue growth in 2014 and 2015 was strong, and the profits appear to be not far behind as net losses were cut both years and the profit margin is also improving. Analysts are projecting that the company will boost revenues another 40% or so in 2016 and will have close to doubled 2015’s figure by the end of 2017. Profitability appears to be an ongoing concern, though a shrinking one, and the company’s strong quick and current ratios indicate that Plug Power has the resources on hand to tackle its continued expansion.

SITO Mobile (SITO)

Market Cap: $46.33 million

Share Price: $2.74

SITO Mobile, previously known as Single Touch Mobil, is an advertising company that offers businesses a mobile location-based platform. The company has a lot of troubling realities to grapple with, including a lot of debt, much of it added last year, and very low quick and current ratios.

However, there’s also a few key factors that would appear to demonstrate why some investors are still in despite the concerning aspects of the balance sheet. Namely, revenue continues to grow steadily, reaching a little more than double its 2012 levels last year, and a gross margin just a little shy of 60%.

Mobile advertising is a hot segment at the moment, and while SITO may be a pretty small player in that field, it’s still showing strong growth and has some positive attention from analysts.

USA Technologies (USAT)

Market Cap: $166.36 million

Share Price: $4.44

USA Technologies makes devices to allow for automated sales in the unattended point of sale market, offering an electronic solution for businesses operating without cashiers. Clearly functioning in a market with a future, USA Technologies has continued to steadily grow revenue year after year while swinging into profitability in 2013, something that has had the analysts covering it giving the thumbs up.

The company’s stock has been strong of late, gaining nearly 65% over the last year and up nearly 45% in 2016. In fact, there’s a chance that investors may have already missed the boat on this one as the mean price target from analysts is just $0.10 above where it currently sits.

However, nothing quite stokes the markets like growth, and USA Technologies is anticipating plenty in revenue and earnings over the course of the year. Analysts are expecting the company to boost revenues by another 25% or more in 2016 and shift into the black with earnings of $0.04 a share.

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

Companies

Symbol Name Price Change % Volume
MEET The Meet Group Inc. 3.48 -0.02 -0.57 563,809 Trade
GOOG Alphabet Inc. 1,150.34 5.44 0.48 903,780 Trade
NEON Neonode Inc. 2.89 -0.07 -2.24 2,811 Trade
SITO SITO Mobile Ltd. 0.78 0.02 2.63 27,504 Trade
USAT USA Technologies Inc. 7.09 -0.20 -2.74 414,273 Trade
PLUG Plug Power Inc. 2.33 0.04 1.75 2,225,660 Trade
AMZN Amazon.com Inc. 2,020.99 9.99 0.50 2,981,343 Trade

Comments

Watchlist

Symbol Last Price Change % Change
AAPL

     
AMZN

     
HD

     
JPM

     
IBM

     

Blockchain in Digital Identity - Discussion at the EU Parliament

From the recent Blockchain For Europe Summit in Brussels: Panel on Digital Identity