Despite worries about a global economic slowdown, the benchmark equity indices staged a comeback on Monday driven by a tech stock rally. Tech shares rebounded, supporting the S&P 500 to a 0.6% gain, while the tech-heavy Nasdaq Composite rose 1.3%. However, Nasdaq is still down 16.9% this year and is off 19.8% from its record.
The tech sector was hit heavily this year on investors’ concerns about the Federal Reserve’s plan to raise interest rates to tame inflation. According to Wedbush analyst Dan Ives, this might be the time to ‘aggressively own tech names,’ because the sector looks oversold. The tech sector might rebound strongly due to the rising dependence on technology.
Despite the market’s volatility, under-the-radar tech stocks Limelight Networks, Inc. (LLNW), SurgePays, Inc. (SURG), and BigBear.ai Holdings, Inc. (BBAI) have gained more than 35% this year. Hence, we think these might be sound additions to one’s watchlist.
Limelight Networks, Inc. (LLNW)
LLNW in Tempe, Ariz., operates as a provider of content delivery network and related services in the Americas, Asia-Pacific, Europe, and the middle east. The company operates private global networks to last-mile broadband network providers and offers live on-demand video delivery services.
On March 7, LLNW announced that it had agreed to acquire edge-security, content delivery, and video services provider Yahoo's Edgecast, Inc. in an all-stock transaction. The combination is expected to create a globally scaled, edge-enabled software solutions provider with significant Pro-forma revenue.
On February 2, the company announced the launch of its Layer0 Security Platform. The fully PCI-compliant solution should bolster LLNW’s capabilities in the web CDN and security market.
For its fiscal fourth quarter, ended December 31, LLNW’s revenue increased 13.5% year-over-year to $62.89 million. Its non-GAAP net income and non-GAAP net income per share came in at $2.41 million and $0.02, up substantially from their negative year-ago values. Its adjusted EBITDA improved 170.4% from the prior-year quarter to $9.66 million.
The consensus EPS estimate for the quarter ended March 31, 2022, indicates a 55.6% year-over-year increase. Likewise, the $56.65 million consensus revenue estimate for the same quarter reflects a 10.7% rise from the prior-year period.
The stock has gained 34.7% in price over the past year and 39.4% year-to-date to close yesterday’s trading session at $4.78.
SurgePays, Inc. (SURG)
SURG in Bartlett, Tenn., is a financial technology and telecommunications company that provides services to the underbanked communities in the United States. The company operates a blockchain platform that utilizes financial and prepaid products to transform corner stores and bodegas into tech hubs.
On April 7, SURG announced the acquisition of Torch Wireless, a wireless broadband provider with the FCC’s Affordable Connectivity Program (ACP). The acquisition is expected to enhance the operating capability of the company through the increased participation of SURG within the ACP program.
On March 17, SURG announced the roll-out of a rewards program exclusively for its shareholders on the TiiCKER platform. Brian Cox, Chairman and CEO of SURG, said, "We believe TiiCKER gives us a unique opportunity to reward shareholders while providing a connective touchpoint to create familiarity and awareness of our products and services."
For its fiscal year ended December 31, SURG’s net cash provided by financing activities increased 357.9% year-over-year to $21.27 million. The company’s cash balance came in at $6.28 million, registering an 832.3% improvement from the prior year.
The Street’s $1.19 EPS estimate for its fiscal year 2022 indicates a 138.5% year-over-year increase. And the Street’s $129.64 million revenue estimate for the same year reflects a 153.9% rise from the prior year.
SURG’s stock has gained 70.3% in price year-to-date and 14.7% over the past three months to close yesterday’s trading session at $3.44.
BigBear.ai Holdings, Inc. (BBAI)
BBAI offers analytics solutions for the defense, intelligence, and commercial markets. The Columbia, Md., company offers a suite of subscription-based products that enable customers to catalog, curate, manage, and automate their data feeds.
On April 11, BBAI announced its acquisition of ProModel Corporation, a simulation-based predictive analytics software provider. The acquisition is expected to unlock critical insights for predictive maintenance and process optimization and bolster the company’s commercial growth strategy.
For its fiscal fourth quarter, ended Dec.31, 2021, BBAI’s revenue came in at $33.48 million, while its gross margin stood at $3.83 million. For its fiscal year ended Dec. 31, 2021, its revenue and gross margin came in at $145.58 million and $34.07 million, respectively.
Analysts expect BBAI’s EPS to increase 83.5% year-over-year for fiscal 2022.The Street expects its revenue for the same period to improve 24.6% from the prior year to $181.40 million.
The stock has gained 78.5% in price year-to-date and 90.9% over the past three months to close yesterday’s trading session at $10.10.
LLNW shares were trading at $4.60 per share on Tuesday afternoon, down $0.18 (-3.77%). Year-to-date, LLNW has gained 34.11%, versus a -11.28% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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