2024’s Underdog Tech Stocks: 3 Hidden Gems in a Crowded Market
Tech stocks look promising in 2024. The sector is known for its high growth potential, and the predicted fall of interest rates later this year could improve the implied valuation of many companies. However, not all tech stocks are created equal; some hold more upside potential than others.
Often, investors can find great opportunities where others are afraid or unwilling to look. They exist away from the marquee names spoken by the talking heads on Wall Street, quietly posting strong results to the market quarter-over-quarter.
So, in this article, I’ve compiled a list of three underappreciated tech stocks for investors to buy and hold for the long haul. These options represent a good mix of risk and reward, and their prospects seem attractive.
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Here are three tech stocks for investors to consider.
Data Storage Corporation (DTST)
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Data Storage Corporation (NASDAQ:DTST) specializes in cloud storage and cloud computing. This is an underappreciated name on Wall Street, but its most recent quarterly report may have turned some heads.
Namely, revenue increased by 35% for the period ending September 2023. It also has strong momentum in securing new contracts and expanding relationships with existing clients while also reporting positive bottom-line profitability with an EPS of 0.02.
Those results are promising, especially considering tech stocks like DTST focus on expanding their top lines over breaking even. DTST may have a smaller risk profile than other companies consistently publishing losses each quarter. Indeed, the company reported a positive EPS for each quarter in FY2023.
DTST is also diversifying its revenue and income streams for both software and hardware, with an increase in revenue in Q3 2023 compared to the previous year. It plans to expand its services internationally and grow its distribution channels. These results make DTST one of those tech stocks to buy.
Quantum Computing (QUBT)
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Quantum Computing (NASDAQ:QUBT) is a pure-play quantum computing stock investors should consider for concentrated exposure to this industry.
QUBT stock is my contrarian pick for this list. That’s because the company missed analyst expectations for both its revenue and EPS numbers. Namely, EPS came in at 75% below expectations at -0.11 and revenue at 10% for last quarter.
However, I feel these short-term misses (which weren’t due to structural issues of the company) don’t detract from the long-term thesis of owning the stock, with quantum computing widely considered to be a powerful growth driver for the future.
Indeed, these weaknesses can become valuable entry points for long-term investors instead, as it is down over 39% over the past year. Analysts predict revenue for QUBT will grow 161% per annum, which dwarfs the expected growth rate of the industry at just 12%.
It also has just 75 million shares outstanding, which means there’s plenty of upside for investors if they are willing to scoop up shares of QUBT stock now while they are still cheap.
One Stop Systems (OSS)
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One Stop Systems (NASDAQ:OSS) specializes in high-performance computing (HPC) systems. Namely, it produces components such as graphics processing units and solid-state drives. I predict stocks like OSS that make the picks and shovels for emergent tech like AI to thrive will surge in value due to high demand and a lack of supply in the market. This stock is no exception.
OSS also has some momentum-based qualities on its side. Namely, it beat EPS and revenue estimates last quarter, which could be part of a broader turnaround in the company’s finances, as its shares were down over 30% in the last year.
The bull case for OSS is because it is in an explosive industry and is a penny stock that trades at a very cheap valuation. It has an enterprise value to sales multiple of just 0.5 times sales, and a market cap of $43.8 million is another appealing factor.
Adding a small position in OSS for its hardware position in the AI industry may reap substantial returns in the future, making it one of the tech stocks to buy.
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Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Matthew Farley did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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