The technology sector shows strong growth prospects due to increased spending on Artificial Intelligence (AI), cloud computing, and cybersecurity. Analysts expect growth in 2024 from greater tech adoption in businesses, education, and healthcare, and the shift to hybrid work environments. Moreover, government support for innovation also boosts the tech industry’s prospects.
Against this backdrop, investors might consider investing in fundamentally robust tech stocks such as Sabre Corporation (SABR), OppFi Inc. (OPFI), and Lantronix, Inc. (LTRX) to capitalize on the industry’s tailwinds. Priced under $5, these stocks could double by the end of the year.
With a rising demand for faster connectivity, improved workspace standards, and digitization across sectors, the tech space is on its way to a massive boom in its prospects. Gartner forecasts an 8% year-over-year increase in worldwide IT spending, reaching $5.06 trillion this year.
The Biden-Harris administration's $504 million investment in 12 Tech Hubs further fuels this momentum by funding critical projects, creating jobs, and boosting the nation’s competitiveness. This investment also supports the growing need for high-quality hardware to meet complex processing demands, driving increased hardware sales.
Considering the positive trends in the industry, let us discuss the fundamentals of three tech stocks under $5, starting with #3.
Stock #3: Sabre Corporation (SABR)
SABR is a software and technology company that drives the global travel industry, supporting a diverse array of travel businesses, from airlines and hotels to travel agencies and other suppliers. It operates through two segments: Travel Solutions; and Hospitality Solutions, serving customers in 160 countries.
On August 14, SABR announced the renewal of its multi-year distribution agreement with WestJet, a major carrier based in Canada. The agreement aims to provide SABR-connected agencies with access to WestJet's innovative content, which includes future New Distribution Capability (NDC) offers.
The agreement is among many in SABR’s list of innovations in travel and carrier-based partnerships. With innovations that work mostly for the convenience of its customers, SABR is securing its place in the industry by boosting consumer numbers and its overall growth.
On August 8, SABR announced a new, expanded, multi-year agreement with Priceline, a leading online travel agency, to deliver joint growth in travel retailing. Priceline will implement Sabre Direct Pay to enhance its travel payment processes, providing a more secure, automated, and integrated payment solution.
SABR is establishing a stable growth prospect and staying loyal to its customers by providing convenient payment methods to meet its growing needs.
SABR’s revenue for the fiscal 2024 second quarter, which ended June 30, increased 4% year-over-year to $767.24 million. The company’s adjusted operating income increased 132.1% from the prior year’s quarter to $106.99 million. Its adjusted EBITDA grew 76.2% from the year-ago value to $128.69 million.
For the fiscal year 2025, analysts expect SABR’s revenue and EPS to increase 5.9% and 194.1% year-over-year to $3.23 billion and $0.16, respectively. Furthermore, the company’s EPS is expected to grow 53.5% annually over the next five years.
SABR shares have gained 6.9% over the past six months, closing the last trading session at $2.96.
SABR’s positive outlook is reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
SABR is ranked #20 out of 75 stocks in the Technology – Services industry. The stock has a B grade for Growth, Value, and Quality.
To see SABR’s Stability, Sentiment, and Momentum ratings, click here.
Stock #2: OppFi Inc. (OPFI)
OPFI is a tech-driven specialty finance platform expanding community banks' reach to provide credit access to everyday Americans. Through its mobile-optimized OppLoans platform, eligible applicants can voluntarily opt into the OPFI TurnUp Program, which helps them find more affordable credit options.
On August 1, OPFI announced its strategic acquisition of a 35% equity interest in Bitty Advance, a credit access company specializing in revenue-based financing and working capital solutions. The acquisition also includes options for OPFI to gradually obtain majority and full company ownership.
OPFI is focused on expanding small business financing, particularly as it increasingly shifts online. The company expects Bitty's digital platform to leverage this growth, scale operations, and generate increased profits in the future.
For the fiscal 2024 second quarter that ended June 30, 2024, OPFI’s total revenue increased 3.1% year-over-year to $126.30 million. Its adjusted EBT rose 55% from the year-ago value to $32.42 million.
Moreover, the company’s adjusted net income and adjusted EPS stood at $24.78 million and $0.29, up 56.2% and 53.5% from the previous year’s period, respectively.
Analysts expect OPFI’s revenue for the fiscal fourth quarter ending December 2024 to increase 2.3% year-over-year to $135.91 million. Its EPS for the next quarter is expected to grow 46.7% from the prior year’s period to $0.15. Plus, the company surpassed the consensus EPS estimates in each of the trailing four quarters.
OPFI shares have gained 22.8% over the past month and 45.2% over the past three months, closing the last trading session at $4.69.
OPFI’s robust prospects are reflected in its POWR Ratings. The stock has an overall B rating, translating to Buy in our proprietary rating system.
OPFI has an A grade for Sentiment and a B for Quality, Growth, and Momentum. It is ranked #16 in the 129-stock in the Software – Application industry.
To access OPFI’s additional ratings for Stability and Value, Click here.
Stock #1: Lantronix, Inc. (LTRX)
LTRX provides solutions for video surveillance, infotainment systems, and intelligent substation infrastructure. The company's IoT offerings comprise IoT System Solutions, Embedded IoT Modules, and Software and Engineering Services.
On June 27, LTRX announced the launch of its new next-generation desktop or 1U rack mountable EDS5000 series of device servers, supporting 8, 16, or 32 serial devices over Ethernet. These servers enable easy remote access and management of serial-based devices like medical equipment, POS terminals, and security systems.
As remote work environments grow, LTRX aims to enhance its customers' ability to maintain and expand serial connections over Ethernet, improving management and visibility and driving the company's growth through these innovations.
On April 16, LTRX announced the launch of its FOX4 and Bolero 43 edge compute tracker telematic gateways. These new devices, designed for asset and fleet management, come pre-configured with the Percepxion IoT edge software platform for secure device management.
Innovations like these will help the company to keep a strong presence in the technology playing field and subtly grow its customer base and popularity due to its convenient tech solutions, driving its overall growth.
During the fiscal 2024 third quarter that ended on March 31, 2024, LTRX’s net revenue increased 24.9% year-over-year to $41.18 million. Its non-GAAP gross profit rose 13.6% from the year-ago value to $16.91 million.
In addition, the company’s non-GAAP net income amounted to $4.23 million and $0.11 per share, representing increases of 97.5% and 83.3% year-over-year, respectively.
Street expects LTRX’s revenue and EPS for the fiscal fourth quarter ending June 2024 to increase 40.5% and 158.3% year-over-year to $49.06 million and $0.16, respectively. Furthermore, the company surpassed consensus revenue estimates in three of the four trailing quarters.
LTRX shares have gained 7.1% over the past five days closing the last trading session at $3.64.
LTRX’s strong outlook is mirrored in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
LTRX has an A grade for Growth and a B for Value, Sentiment, and Quality. Within the B-rated Technology – Hardware industry, it is ranked #2 out of 39 stocks.
To see LTRX’s Stability and Momentum ratings, click here.
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SABR shares fell $0.26 (-8.78%) in premarket trading Wednesday. Year-to-date, SABR has declined -32.73%, versus a 18.29% rise in the benchmark S&P 500 index during the same period.
About the Author: Aanchal Sugandh
Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.
3 Tech Stocks Under $5 That Could Double by Year-End StockNews.com
