ASUR - 3 Small-Cap Tech Stocks That Appear Ready to Resume Their Rallies
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Unearth hiddentreasures in the high-risk, high-reward realm of small-cap stocks,where savvy investors can capitalize on market dips and ride the waveof growth, armed with diligent research and risk managementstrategies.
Waiting for a pullback on quality small-cap stocks can be anattractive investment strategy for risk-tolerant investors seekinghigher returns. Small-cap stocks have historically outperformed their larger peers over a long time horizon, offering higher growthpotential in exchange for some additional risk. However, it isessential to focus on quality stocks with strong fundamentals, as theyare more likely to withstand market fluctuations and deliverconsistent returns in the long run.
These under-the-radar companies can sometimes avoidmuch of the broader market chaos, making them appealing investmentoptions during market dips. When investing in small-cap stocks, it iscrucial to focus on research and make proper asset allocation decisions, as these stocks are highlyvolatile and susceptible to market risks. Investors should alsoconsider their risk appetite before venturing into small-capinvestments, as these stocks can experience significant declinesduring market downturns.
Buying the dip in quality small-cap stocks can be a rewarding strategy for investors with ahigher risk appetite and a long-term investment horizon. By focusingon strong fundamentals and proper asset allocation, investors canmaximize their returns and grow their wealth over time whilenavigating the inherent risks associated with small-capinvestments.
Withquality small-cap stocks in mind, here are three tech-focusedcompanies that are worth researching further:
1. Asure Software(NASDAQ: ASUR)
The Austin, Texas-based company provides cloud-based human capital management (HCM) software solutions geared towards small and medium-sizedbusinesses. Asure’s suite of services aims to help businesses cutcosts by streamlining back-office operations across human resources,payroll, tax, employee attendance, HR compliance, and more. Since thestart of 2023, Asure has inked partnerships with notable companiessuch as H&R Block (NYSE: HRB) and Intuit's (NYSE: INTU)TurboTax to expand their offerings and features aimed at helping smallbusiness boost their employee retention and recruitment efforts.
Asure Software sawimpressive growth during 2022, which resulted in total revenue of$95.8 million or 26% year-over-year growth .Adjusted EBITDA for 2022 improved by $4.2 million to reach $11.8million. The HCM provider’s 2022 results surpassed its own guidanceby a significant margin and with SMBs continuing to look for ways tocut costs and get leaner, Asure’s products & services likelyface another year ahead of strong demand and growth.
The strong growth trendappears to be continuing into 2023 so far, after the company reportedimpressive Q12023 results with revenue of $33.1 million, a 36% increase from Q12022. Recurring revenue reached $28.0 million, up 22% from theprevious year, and net income stood at $0.3 million, a $3.4 millionimprovement year-over-year. The company also reported a gross profitof $24.4 million, marking a 58% rise from Q1 2022.
Following these strongresults, Asure has updated its full year 2023 guidance, with expectedrevenue in the range of $111.0M - $113.0M, up from the previouslyestimated $105.0M - $107.0M. The company also provided Q2 2023guidance, forecasting revenue between $25.0M - $26.0M, and an AdjustedEBITDA of $2.5M - $3.5M.
According to Nasdaq.com ,Institutional investors continue to provide Asure with strong supportwith institutional ownership of over 65%, which equates to a totalvalue of around $182 million, as of this writing. Furthermore,disclosures from the period ended March 31, 2023, showed Asure gainedBarclays PLC (NYSE: BCS), Ritholtz Wealth Management, Jump Financial,LLC, and others as new institutional shareholders.
2. C3 AI (NYSE:AI)
Based out ofRedwood City, CA, C3 AI describes itself as an enterprise AI appsoftware company, which offers a comprehensive platform that allowsbusinesses and organizations to develop, deploy and operate AIapplications. C3 AI's platform features many industry-specificsoftware-as-a-service (SaaS) AI apps that are geared toward helpingenterprises begin to adopt new technologies into theiroperations.
Artificial intelligence has been a major theme through thefirst half of 2023. The rise of OpenAI’s ChatGPT and the incrediblecapabilities of new AI programs have led to a surge in demand. C3 AIhas been a beneficiary of this demand, as investors look to scoop upAI-related investments. Even the U.S. Department of Defense haspartnered with C3 AI to develop enterprise AI solutions for the U.S.Air Force’s critical mission readiness.
C3 AI is well-capitalized with a strong current ratio of 7.70, as a result of cash &equivalents holding of over $311 million and limited debt, as ofJanuary 2023. Nasdaq.com highlights C3 AI’s institutional ownership at nearly 42%, which hasseen 80 new institutions add shares of C3 AI since the end of Q3 2022.
3. Vimeo(NASDAQ: VMEO)
Vimeo is a New York-based video software solutions provider. Using aSaaS model, Vimeo allows subscribers to create, collaborate and deployvideo within its platform. From OTT streaming and monetizationcapabilities to AI-based video creation and editing, Vimeo'splatform provides a comprehensive solution for major corporations,small businesses, solopreneurs, schools, and more.
In early May 2023, Vimeoreported first quarter 2023 financialresults , which continued to demonstrate growth at the videosoftware provider. While total revenue did see a slight 4% decreasey/y to $103.6 million, net losses saw a massive improvement of $25.9million during the quarter to reach ($0.7 million). In addition,adjusted EBITDA improved by $13.6 million to reach $3.2 million duringthe first three months of 2023. Enterprise booking saw impressivegrowth of 62% y/y, thanks to new customers including BBC, UCLA,Johnson & Johnson (NYSE: JNJ), Warner Brothers, and more.
Over the past severalmonths, Vimeo's share price has struggled but has continuouslyfound support around the $3.25 level. Based on the financial results,Vimeo is seeing a growth shift to enterprises. This could help thecompany stabilize results, as enterprise customers tend to be morevested and longer-term focused than smaller organizations andindividuals. If Vimeo can continue to build on its enterprise growth,its share price could see some improvement.
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