HomeMarket NewsUncovering Hidden Gems: Technology Stocks Poised for Explosive Growth

Uncovering Hidden Gems: Technology Stocks Poised for Explosive Growth

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The fast-paced world of technology demands innovation for survival. Companies that fail to adapt risk fading into obscurity. Not just tech firms but entities across all sectors must embrace new technologies to thrive.

While Nvidia (NASDAQ:NVDA) garners attention for its AI dominance, this article focuses on undiscovered technology stocks with the potential for explosive returns.

The AI market is projected to contribute a staggering $15.7 trillion to the global economy by 2030. Within this, $6.6 trillion is expected from increased productivity, while $9.1 trillion will stem from consumption-side effects. The tech sector will be a major player in driving this growth.

Here, we unveil three hidden gems in the technology sector that could be significant value creators.

Arm Holdings (ARM)

ARM company logo on the paper document and large microchips placed around. Illustrative for electronic chip manufacturer.

Source: Ascannio / Shutterstock.com

Arm Holdings (NASDAQ:ARM) went public in September 2023 and has surged by 123% in just six months. Despite this rally, ARM stock remains under the radar. The company is poised to drive immense value over the next five years.

Arm Holdings specializes in developing and licensing central processing unit products and related technologies. Its customers include semiconductor companies and original equipment manufacturers.

In Q3 2023, Arm reported revenue of $824 million, a 14% year-on-year increase. The company shipped 7.7 billion chips in the same period, and its trailing 12-month free cash flow stood at $724 million. With robust growth in license and royalty revenue, Arm is on track to exceed $1 billion in annual FCF within the next 24 months.

What sets Arm apart is its shift from general-purpose CPUs to AI-enabled CPUs tailored for specific industries like IoT, consumer electronics, cloud networking, automotive, and mobile sectors. With a substantial addressable market ahead, the company’s growth prospects are promising.

Amdocs Limited (DOX)

Close up of phone with creative forex chart on blue background. Trade, finance, technology and communication concept. 3D Rendering. Tech Stocks to Buy Before the Bull Market Returns. Tech Stocks to buy

Source: Golden Dayz / Shutterstock.com

Amdocs (NASDAQ:DOX) offers software and services to the global telecommunications and media industry. Despite trading sideways over the past year, DOX stock boasts an attractive forward price-earnings ratio of 13.7 and a dividend yield of 2.14%. Given its solid fundamentals and industry growth potential, Amdocs is a stock worth holding for the long term.

In Q1 2024, Amdocs reported revenue of $1.25 billion and a record 12-month backlog of $4.21 billion. Additionally, the company reaffirmed its free cash flow outlook of $750 million for the year and maintains a liquidity buffer of $1.1 billion.

Amdocs has been proactive in staying ahead of the curve through strategic investments and acquisitions. For instance, it is collaborating with Microsoft (NASDAQ:MSFT) to drive Generative AI innovation in the telecommunications sector. This forward-thinking approach positions Amdocs for sustained growth.

Photronics (PLAB)

PLAB stock: Electronic board, pen, processor on the background of schematic circuit diagram and photomask for manufacture of printed circuit boards.

Source: Mentor57 / Shutterstock

Photronics (NASDAQ:PLAB) is an undervalued technology stock with potential for significant growth. Despite a 75% rally in the last year, PLAB stock trades at a modest forward price-earnings ratio of 13. Over the next five years, PLAB is poised to deliver multibagger returns.

Photronics is a global provider of photomask products and services used in manufacturing integrated circuits and flat panel displays. The company also offers electrical and optical components.

In Q1 2024, Photronics reported a 2% year-on-year revenue growth to $216.3 million, but improving order rates hint at an acceleration in growth. The company forecasts Q2 revenue of $231 million and an operating margin of around 28%.

Looking ahead, the demand for photomasks will continue to rise with the expansion of chips in IoT, 5G, crypto, and consumer products. Photronics’ focus on margin enhancement and growing cash flows positions PLAB stock for an upward trajectory.

On the date of publication, Faisal Humayun did not hold any positions in the securities mentioned. The opinions expressed are those of the writer, complying with the InvestorPlace.com Publishing Guidelines.

Faisal Humayun, a senior research analyst with 12 years of industry experience, has authored numerous stock-specific articles focusing on the technology, energy, and commodities sectors.

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The post 3 Under-the-Radar Technology Stocks to Buy for Multibagger Returns appeared first on InvestorPlace.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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