7 Emerging Tech Stock Disruptors With Significant Upside
Volatility and a souring macroeconomic outlook have created a lot of downward pressure for tech stocks in recent weeks, investors fearing the high valuations many of them boast are unsustainable as growth prospects dim. Despite the broader pressures, this hasn’t tarnished potential of emerging tech stocks.
However, as tech stocks begin to emerge from their September lows, public equities investors may want to consider which disruptive stocks are worth investing in. Below are seven tech equities disrupting their respective industries.
These stocks also have the possibility to reap investors’ market-beating returns during times of growing bearish sentiments.
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Manhattan Associates (MANH)
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Manhattan Associates (NASDAQ:MANH) has made a couple of my prior lists, and the company’s mission to make supply chains less haphazard should not go unnoticed. For those unfamiliar, Manhattan Associates is a leading provider of supply chain management software and services. The company helps its customers to optimize their inventory, warehousing, transportation, and distribution operations.
Manhattan Associates has been benefiting from both the e-commerce boom, as online retailers need to manage their complex and fast-changing supply chains, and digital transformation efforts, which has compelled many businesses to modernize their technology systems. The company also leverages artificial intelligence, machine learning, and cloud computing to offer innovative solutions that can adapt to changing customer demands and market conditions. This makes it one of those emerging tech stocks to consider.
Despite supply chain bottlenecks largely being behind us now, retailers and distributors have continued to seek to improve their efficiency, agility, and customer satisfaction. As a result, Manhattan Associates accelerated top-line growth numbers to above 20% in both the first and second quarters in 2023, and shares have risen, in tandem, by 72.7%.
Symbotic (SYM)
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Symbotic (NASDAQ:SYM) is a robotics company that specializes in automating warehouse operations. The company’s robots can move, store, and retrieve products in warehouses, reducing labor costs and increasing efficiency and accuracy. Symbotic’s technology can also handle a wide range of products, from cases to individual items, and can integrate with existing warehouse management systems. While SYM’s revenue has doubled consecutively since 2020, management expects there to be more recurring revenue and, therefore, top-line predictability as more products are deployed.
While Symbotic is indeed a robotics company, the firm operates in the broader supply chain management (SCM) space. SCM is still a nascent field, but pandemic-induced supply chain disruptions catapulted a number of efficient solutions out of relative obscurity. Besides SCM being a $20 billion industry, there is still much less adoption amongst retailers versus other industries.
According to a Gartner survey, there is currently only a 42% adoption rate amongst retailers, which indicates there is a lot of white space in SCM software, especially for retail-focused players like Symbotic. All in all, it’s one of those emerging tech stocks to consider.
Nvidia (NVDA)
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Our third entrant has recently become a disruptor in the vast field of artificial intelligence with its powerful graphics processing units (GPU). Nvidia (NASDAQ:NVDA) GPUs are essential for high-performance gaming, computing, and artificial intelligence applications.
The graphics chipmaker’s A100 and H100 chips power some of the most advanced AI systems in the world, such as self-driving cars, cloud computing, and conversation bots like ChatGPT. Nvidia’s chips have continued to sell out at a record pace this year. Catalysts like AI are why it’s one of those emerging tech stocks to keep on your watchlist.
The AI craze has caused Nvidia’s shares to quadruple since the start of the year, but recent market volatility has created a potentially attractive entry point for interested investors. The graphics chipmaker was trading at a forward price-to-earnings ratio of 48.1x in late August, but trading multiples have fallen to 33.5x forward earnings. Investors should definitely take note of this disruptor and the opportunities its products can bring.
UiPath (PATH)
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UiPath (NYSE:PATH) is working to disrupt the mundane office work the way we understand it today. Through the company’s robotic process automation (RPA) software, which uses “software bots,” UiPath has been able to design a set of tools that automate repetitive and mundane tasks across various business functions. U
iPath’s Business Automation Platform allows users to design, deploy, and manage their own bots, without requiring any coding skills.
With UiPath having already passed the $1 billion in annual sales mark in fiscal 2023 (which ended on Jan. 31), there is a lot to be hopeful about in terms of this company’s growth trajectory. The RPA stock was also hit during the September slump and thus trades at cheaper forward-looking EBITDA multiple of 34.6x. For investors looking for exposure to business automation tools, UiPath might be a stock worth looking at.
Canoo (GOEV)
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Canoo (NASDAQ:GOEV) is an electric vehicle (EV) startup that aims to disrupt the traditional car ownership model. The startup offers a subscription-based service that allows customers to access its vehicles on a monthly basis, without any long-term commitment or upfront payment.
Canoo’s vehicles are designed to be spacious, versatile, and customizable, with features such as a modular interior, a steer-by-wire system, and a skateboard platform that can accommodate different body types.
Canoo has not generated any revenue yet, but it expects to be able to deliver 20,000 vehicles annually once production and manufacturing scale. The market’s bearish sentiment on startups, or companies that are pre-revenue, has caused Canoo’s shares to tumble this year, but does not mean there is not an opportunity to be had here. As electric vehicles become the norm in the United States, Canoo could eventually be a company that sticks out from the rest of the EV players in a positive way.
Ballard Power Systems (BLDP)
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Ballard Power Systems (NASDAQ:BLDP) is a pioneer in the hydrogen fuel cell industry. The company primarily develops proton exchange membrane (PEM) fuel cell products and has been for more than 30 years. These products can help generate reliable electricity for various applications, such as buses, trucks, trains, ships, and backup power systems.
Ballard Power Systems has been gaining traction in the global market, as more countries and companies are adopting hydrogen as a green alternative to fossil fuels. Unfortunately, however, Ballard Power Systems has been impacted by slumping demand in certain international markets, particularly in Europe and China, where hydrogen fuel cell demand has fallen due to slumping economic growth in both regions.
These short-term headwinds are likely to diminish as the global economy picks up steam and hydrogen demand recovers. Potential investors should be ready to invest in BLDP for when this happens.
Marqeta (MQ)
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Marqeta (NASDAQ:MQ) is a fintech company that provides a modern card issuing platform that enables businesses to create customized payment cards for their customers or employees. Marqeta’s platform allows users to control every aspect of their card programs, such as spending limits, rewards, fees, fraud prevention, and real-time data. Moreover, Marqeta supports digital wallets, such as Apple Pay and Google Pay.
The Federal Reserve’s campaign to bring down inflation with steep rate hikes has definitely hurt Marqeta’s shares, which trade well below their IPO price of 27/share. A deteriorating macroeconomy has not helped in terms of improving revenue guidance either. However, Marqeta still has a lot of room for growth in the payments processing solutions market, which is likely to reach a size of $139.9 billion in 2030. Marqeta also recently extended a partnership with Block (NASDAQ:SQ) to continue powering its popular Cash App product.
On the date of publication, Tyrik Torres did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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