Working the stock market is a data game. Getting the best information, in a timely way, and knowing how to use it, are keys to success. So, here are some numbers to think about. According to industry market research, artificial intelligence companies and products are on the verge of explosive growth. The sector totaled some $10 billion in 2018; by 2025, the companies, products, value-added, and marketing are expected to reach over $125 billion.
You probably already are on it, even if you didn’t realize. AI tech lies behind the growth of digital personal assistants like Alexa and Siri. Most online advertising and pop-ups are powered by AI systems.
All of these systems are going to improve, as engineers and developers fine-tune the coding, create new search apps, and update the underlying hardware. And those technological improvements are going to find their way into stock values. The companies that roll them out, and build on them, are going to get a share of the coming boom.
With this in mind, Wall Street analysts have tapped three lesser-known stocks as primed for gains. They’re an interesting lot, spread across a variety of sectors, each with their own approach to artificial intelligence.
Opening up the TipRanks’ database, we’ve pulled the details on these names, to find out what makes them compelling.
Remark Holdings (MARK)
The first company on our list uses AI to power its network of subsidiaries. Remark Holdings has its hands in many baskets – online retail, digital content delivery, facial recognition, and even China’s somewhat notorious social credit system. The company is headquartered in Las Vegas, with offices in LA, Beijing, Shanghai, and Chengdu.
Remark’s platform product, KanKan, is in use across China, especially in retail. The platform delivers insights on customer behavior, so that retailers can fine-tune operations and bring the right items to the sales floor at the right time. Online, KanKan offers market targeting and credit risk analysis in the fintech sector. And in the public safety niche, Remark’s KanKan brings behavioral analytics to construction sites, restaurants, and roadways.
Like many emerging tech companies, Remark typically operates at a net loss. However, the scale of that loss has been declining in sequential quarters, even during the corona pandemic. EPS in the first quarter this year was (5 cents), while it improved to (4 cents) in Q2. Both of those results beat the forecast. Revenues have been growing steadily, too, from $260,000 in Q4 last year to $431,000 in Q1 this year, to $2.3 million in Q2, the most recent reported. The company’s new bio-safety business, which uses AI to monitor thermal imaging products in casinos, restaurants, hotels, and medical centers – and is based in the US – brought in $1.1 million of that revenue.
Covering the stock for Roth Capital, 5-star analyst Darren Aftahi strikes an upbeat note in his comments on MARK.
“MARK announced it has begun discussions for potential partnerships with larger global enterprise customers for AI software deployments, which could aid scale. Additionally, MARK is continuing to see healthy demand from new customers for thermal-based offerings, while current customers have also expressed interest in additional AI features, which we believe suggests MARK’s solution has staying power with customers.”
In line with this outlook, Aftahi rates MARK a Buy along with a $4.25 price target. This figure suggests that MARK shares have a stellar 425% upside potential from their current price of $1. (To watch Aftahi’s track record, click here)
WISeKey International Holdings (WKEY)
Next on our list is WISeKey, a company in the cybersecurity industry. WKEY develops codes, crypto-algorithms, and chips necessary to the functioning of online digital security. The company does not confine itself to a single pathway; it creates secure digital identification ecosystems using AI, as well as blockchain and IoT systems. WKEY’s customers include marketers, who are looking for brand protection, and financial institutions seeking secure digital systems.
Among WISeKey’s key products are semiconductor chips used in secure microcontrollers and smart card readers. These chips enable AI platforms to speed up transactions while improving safety and privacy. The company is also heavily involved in online brand and digital identity protection. WKEY’s AI enabled coding and algorithms power recognition software that improves security for customers needing signature or facial authentication.
WISeKey finished 1H20 with $8 million in revenues and $16 million in cash reserves, putting the company in a solid position to weather the COVID-19 pandemic.
Covering this stock for H.C. Wainwright, analyst Kevin Dede writes, "In our view, WISeKey represents an asymmetrical risk-reward opportunity heightened by what has proven to be a surprising ability to deliver a constant stream of new technology and solutions with realworld applicability, and perhaps most importantly, accordant customer relationships.”
Dede’s comments are optimistic, as is his Buy rating and $9 price target. This target implies implies 31% upside to the stock for the coming year. (To watch Dede’s track record, click here)
The last stock on today’s list, Five9, is a cloud computing firm offering a scalable contact center platform based on intelligent cloud technology. With the corona virus pandemic having further pushed the ever-growing trend towards moving routine business online, Five9’s services have become more important to its customers – and more marketable.
The company has seen slow, steady revenue growth, which reached $99.8 million in Q2, and EPS that consistently beats the forecasts. While the company posted net losses in both Q1 and Q2, earnings in those quarters beat the estimates by 33% and 50% respectively.
Five9 uses AI tech to create a better customer contact platform. The company’s products – on mobile, web, chat, email, or social media – streamline the agent-customer engagement, making inbound and outbound contacts more efficient for the contact center. One agent can handle each of the channels from a single desktop AI interface. The promise – and more importantly, delivery – of better online customer service is a gold mine in today’s environment, and supports the quarterly results.
From Canaccord Genuity, 5-star analyst David Hynes sees Five9 as top-tier when it comes to technology and products.
“One of several important differentiators for Five9 is the firm’s open platform and the best-of-breed choices that it avails to customers. In a continuation of that philosophy, Five9 has announced the availability of Voicestream, an API for streaming agent/caller audio to third-party applications in real-time. This API enables real-time, cloud-to-cloud media streaming so that developers and partners who are focused on AI and other innovative areas can integrate their applications directly into Five9’s platform,” Hynes opined.
Accordingly, Hynes gives FIVN shares a Buy rating, and his $145 price target suggests the stock has a 23% upside potential for the coming 12 months. (To watch Hynes’ track record, click here)
To find good ideas for AI stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.