Tech stocks have been one of the strongest drivers of market performance for the past several years.
Lately though, tech stocks have stumbled with some of the biggest names giving mixed guidance and weak earnings. And, unsurprisingly, investors have ditched these big name stocks and it has resulted in huge losses.
Amazon (NASDAQ: AMZN) lost $215 billion in market cap at one point. Facebook (NASDAQ: FB) is down nearly -18% for the year. Netflix (NASDAQ: NFLX) was down as much as -36% from its June highs just last week, with Google-parent Alphabet (NASDAQ: GOOGL, GOOG) down as much as -21% from its July high through last week.
But while the FANGs are starting to recover, the tech stocks I’m interested now are three that you may not have heard of before.
Each of these three offer solid possible gains over the next year, and each are leaders in their respective fields.
Here’s what you need to know about these three stocks.
ServiceNow (NYSE: NOW)
ServiceNow (NYSE: NOW) is a cloud computing firm. Its platform includes a series of programs that cover everything from security and customer service, to human resources and application development, adding efficiencies and automation to a wide variety of business processes.
And this suite of tools has proven to be enticing to clients. In its last earnings release, the firm reported 614 customers totaling $1 million in contract revenue. That may not sound like a big deal, but it represents 37% year-over-year growth.
That growth, and a bunch of one-off deals, took ServiceNow’s revenue to $673.1 million for the quarter, representing 39% year-over-year growth. The company also saw profits climb by more than 78%.
And if these results are any indication, ServiceNow is just getting started. As companies seek to increase efficiencies and automate processes, the service that NOW provides could see its customer base skyrocket with revenues along with it – and these customers are loyal: once they commit, they are likely to stick with the service and add additional functionalities. ServiceNow’s platform can easily scale to include more features with time, which will give the company more firepower to grow profits down the road.
Last month, Jefferies Financial Group initiated coverage of NOW with a Buy rating and a twelve month price target of $240 – 29% higher than the price as of this writing.
iQiyi (NASDAQ: IQ)
iQiyi (NASDAQ: IQ) can best be described as the “Netflix of China.”
A subsidiary of Chinese search giant Baidu (NASDAQ: BIDU), iQiyi’s core business is in distributing original and licensed content through its streaming platform, with both a free membership that’s ad supported and an ad-free subscription-based membership.
What sets iQiyi apart from other streaming platform is its strong content lineup and membership perks, both of which are helping the company rapidly grow its user base. And its paid subscriptions are growing like crazy, doubling year-over-year last quarter rising to 81 million – compare that to just 5 million paid subscribers in 2015.
This mega-growth company recently reported revenue of $1 billion, representing 48% year-over-year growth, with membership revenue up 78% year-over-year to $415.3 million.
Analysts’ average price target for IQ is $29.75, indicating possible upside of 42.55% over the next twelve months. Bank of America recently boosted their price target for the stock to $41 – 96.45% higher than Thursday’s closing price.
Yext (NYSE: YEXT)
Yext (NYSE: YEXT) was a hot stock until about two months ago, but has since fallen more than -30% since its highs reached in early September.
But this may be a great buying opportunity for the stock. Yext is one of the most promising companies in the artificial intelligence (Ai) space, which is growing rapidly and promises to continue growing by leaps and bounds for the foreseeable future.
Yext provides solutions to enable enterprises to manage their digital information in real time. The company isn’t a pure AI play, but it does allow customers to control their public data more effectively by using AI-powered searches using Yext-supplied information.
The company counts Taco Bell, Arby’s, Marriott, and Rite Aid among its clients. It also supplies up-to-date photos, phone numbers, and other information to digital platforms like TripAdvisor, Uber, WeChat, and Yelp.
This summer, Yext also announced a partnership with Amazon (NASDAQ: AMZN) where its Digital Knowledge Management (DKM) platform will be integrated directly into the online retail giant’s popular virtual assistant, Alexa, a move Yext’s CEO, Howard Lerman, said is a “quantum leap forward in Yext’s mission to give businesses control over their digital knowledge and provide customers with perfect information everywhere.”
And this business has paid off in spades. Revenue has nearly tripled in the last three years, and the company has guided for another 30%-plus increase this year. At a 30% discount from its highs reached this summer, this quality growth stock looks like a winner for the long term with a great buying opportunity now.
The average analyst price target for YEXT is $24, suggesting possible upside of 21.64% over the next twelve months. DA Davidson initiated coverage of the stock last month, rating the stock a Buy and setting a price target of $28 – nearly 42% above the current price.