Tech stocks are rising once again following a sell-off last month. The decline in benchmark Treasury yields this week is in sync with the Fed’s decision to maintain its dovish monetary policies at least over the near term. As a result, technology companies, particularly small-cap businesses, are borrowing extensively to take advantage of the “cheap money” scenario to augment their products and services.
The global IT services market is expected to grow from $3.5 trillion in 2020 to $5.73 trillion by 2025 at a CAGR of 11% over the five years.
While large-cap tech companies are currently near business saturation levels, small-cap companies are moving in to leverage high demand amid the hybrid working environment to market their unique services. This is why we believe small-cap tech stocks QAD Inc. (QADA – Get Rating), CTS Corporation (CTS – Get Rating), and Avid Technology, Inc. (AVID – Get Rating) will generate significant returns in the coming months.
With a market-cap of $1.27 billion, QADA provides cloud-based enterprise software solutions for global manufacturing companies across the automotive, life sciences, consumer products, food and beverage, high technology and industrial products industries. It enables measurement and control of business processes and supports operational requirements, including financials, manufacturing, demand and supply chain planning, customer management, business intelligence and business process management. The company markets its products through direct and indirect sales channels, and through distributors and sales agents also.
In February QAD Precision, a QADA division, achieved Team Tier status in the Veracode Verified program that validates a company’s secure software development processes. Also, QADA’s QAD DynaSys announced that month that that QAD DynaSys Digital Supply Chain Planning (DSCP) had achieved the Veracode Verified Standard Status. Furthermore, in January, QADA completed the acquisition of a German-based company, Allocation Network GmbH, which is a best-in-class solution provider for strategic sourcing and supplier management.
For its fiscal 2021 fourth quarter, ended January 31, 2021, QADA’s total revenue increased 5.6% year-over-year to $82.98 million. Its gross profit has increased 13.6% year-over-year to $51.51 million. The company’s operating income for the quarter came in at $7.25 million, up 1965.8% year-over-year. QADA’s non-GAAP pre-tax net income came in at $10.11 million, which represents a 165.2% rise year-over-year. Also, its EPS attributable to Class A shares has increased 1850% year-over-year to $0.39.
Analysts expect QADA’s EPS to improve 25% year-over-year for the current quarter, ending April 30, 2021, to $0.15. It has surpassed the Street’s EPS estimates in each of the trailing four quarters. Also, its consensus revenue estimate of $78.55 million for the current quarter represents a 6.3% rise on a year-over-year basis.
The stock has gained nearly 69% over the past year and closed yesterday’s trading session at $64.36.
QADA’s strong fundamentals are reflected in its POWR Ratings. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has an A grade for Growth and Quality, and a B grade for Stability. We have also graded QADA for Value, Momentum, and Sentiment. Click here to access all QADA’s ratings.
QADA is ranked #8 of 116 stocks in the Software – Application industry.
Founded in 1896, CTS is a manufacturer of sensors, electronic components and actuators. It designs, manufactures and sells a line of sensors, electronic components and actuators mainly to original equipment manufacturers (OEMs) in the transportation, industrial, medical, information technology, defense and aerospace, and communications sector. The company sells and markets its products through its sales engineers, independent manufacturers’ representatives, and distributors. It has a market capitalization value of $982.10 million.
CTS appointed Donna M. Costello, the former chief financial officer of C&D Technologies, Inc., to its board of directors, effective February 11, 2021. The company’s board of directors declared a cash dividend of $0.04 per share, payable on April 23. Also, on December 30, CTS acquired Sensor Scientific, Inc. (SSI), a privately held temperature sensing company. The acquisition is expected to expand CTS’ temperature sensing product portfolio and build on its strategy to focus on innovative products that sense, connect and move.
The company’s net sales were…
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