Tech stocks are always in the news, but for most investors – and we include quite a few fund managers in this category – it usually involves owning the usual suspects – Amazon, Microsoft, Facebook et al. But several of these tech giants are facing headwinds at the moment, and the scope for earning big returns from them is now well behind us.
At the smaller end of the market there still exist a plethora of very interesting companies in the tech space. We spend a lot of time kicking the tyres on hot small caps in both the UK and international markets. Here are a few that have caught our attention in the first half of this year.
ProStar Holdings (TSXV:MAPS)
ProStar Holdings is a recently listed Canadian stock, although its base of operations is in Colorado and it is firmly ensconced in the US civil engineering space. It specialises in geospatial engineering technology that can be used by utilities and construction firms to better understand the complex network of infrastructure that lies under our feet. ProStar already has a battery of international clients and some great tie ups in the US engineering and consulting market, which it continues to ad to. It regularly rolls out new technology for its portable PointMan software. We like the fact that, despite being a small company, it has some very big names on its client roster and is also being recognised for its value by US state infrastructure departments
Supply@ME Capital (LSE:SYME)
This is a revolutionary company that is working to digitise inventory for businesses. It is a great concept and we think the idea has legs. Supply@ME has its fans and its detractors in the market. The company recently funded the acquisition of TradeFlow Capital via a private placement, but has since postponed its results and AGM, drawing criticism from investors and a sell off in its shares. However, it has recently appointed a CFO (April) and has been trading on the LSE without a dedicated CFO so some confusion has to be anticipated. SYME listed in London via a reverse takeover using Abal Group. We like the TradeFlow Capital acquisition, as this adds further strings to its bow, including monetisation of both inventory in transit and warehoused goods. We think this is essential if SYME is going to compete in the fast moving global logistics space, and make a difference.
Listen: Podcast with Alessandro Zamboni, CEO of Supply@ME
Blackbird Plc (LSE:BIRD)
Blackbird Plc specialises in cloud-based video editing, and is breaking into the lucrative US television market. Last month it signed up another 18 TV stations in America to its platform. It is partnering with TownNews which is helping it to build up an impressive client base in the States. Blackbird technology is used by production teams to quickly turn around content and take it live via numerous different platforms. Frankly we see this as the future for many hundreds of smaller media outlets looking to deliver regular and timely high quality visual content. The overall market is fast growing: globally and it is expected to reach $3.04bn by 2027. Blackbird Plc owns nine patents for its technology. Core technology includes Blackbird Codec, a high quality proxy version of video content that can be created faster than real time. Its software removes the need for costly high end work stations and can be used pretty much anywhere. It is a game changer. BIRD shares were trading at GBX 32 at time of writing, slightly down from their peak at around 40 last month. They are still well up on where they were in April.
Arrow Electronics (NYSE:ARW)
Our large cap pick on this list is Arrow Electronics, a Fortune 500 nuts and bolts company that sits smack in the middle of the US tech industry. It has its fingers in too many pies to count, including aerospace, defence, the cloud, data centres, lighting, mobility solutions, power management and security. US market pundits remain broadly bullish on its prospects. This is no one trick pony and has broad exposure across thousands of tech companies globally. We’ve seen a good run on the stock price, which was just under $100 at the start of March. It is now over $120, which is great going for a company of this size and scale. The shares have gone through some short term selling activity which seems more like profit taking than anything else. The consensus among the seven analysts currently covering the stock is hold, with a target price of between $115 and $135.
Cypherpunk Holdings (CSE:HODL)
Cypherpunk Holdings is a Canadian-listed company with a strong portfolio of digital assets, including a treasury reserve composed of Bitcoin. The company is taking stakes in companies and inventory that underpin what it regards as the growing demand for privacy in the digital world. This includes equity stakes in cryptocurrency wallet businesses that are otherwise hard to get into as an investor. The company’s management team has a track record in the cryptocurrency space and has recently been exploring the potential of IPv4 addresses as premium assets that can also be leased out, bringing the firm further yield income. Cypherpunk recently acquired nearly 20,000 shares in Chia Network, an energy-efficient, decentralised blockchain.