Getting in on the ground floor is one way to reap the benefits of a fast-growing technology company. Another is buying shares of small-cap tech companies that hit it big.
The S&P Information Technology Sector Index is up 20% this year compared to the S&P 500 Index, which is up 12%. But which small-cap tech stocks should you target for the best returns?
TheStreet Ratings, TheStreet's proprietary stock rating tool projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Based on 30 major data points, TheStreet Ratings uses a quantitative approach to rating stocks. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.
The 11 stocks on the list are all small-cap stocks (market capitalizations of below $1 billion) and have a "buy" rating, with a B or better grade from TheStreet Ratings. Click through to see which is the top-rated small-cap tech stock.
11. Cimatron (CIMT)
Rating: Buy, B
Year-to-date return: -2.6%
Cimatron together with its subsidiaries, designs, develops, manufactures, markets, and supports computer-aided design/computer aided manufacturing (CAD/CAM) software products.
"We rate CIMATRON LTD (CIMT) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, reasonable valuation levels and good cash flow from operations. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."
You can view the full analysis from the report here: CIMT Ratings Report