21 Jan 4 Growth Stocks to Watch for!
Technology Industry has been focused on minimizing the impact of COVID-19 and marching ahead with its innovations and breakthroughs, be it critical components for semiconductors, cutting-edge data analytics or medical devices.
We take a look at some tech companies that are impervious to the scare and offer a very attractive upside in the long run. These companies not only have an excellent potential for growth and returns but have major upcoming catalysts such as contract awards, new products and services, growing client base or even global expansion plans lined up for the future.
Market Cap: $2.35B; Current Share Price: 15.49 USD
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Olo leverages cutting-edge technology to bridge the gap between customers and restaurants. The Company, which stands for “Online Ordering”, is working towards preparing restaurants to face challenges in the era of digital hospitality. The Company’s enterprise SaaS platform, which offers solutions such as ordering and delivery, is ideal for multi-location restaurant brands.
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The Company’s ordering platform enables direct digital ordering for any brand. The solution is a quick and reliable way to get orders straight to the point of sale, and addresses the changing demand landscape, which is now relying more on digital mediums. The solution can be integrated into any platform, be it mobile, web, social, in-car, voice and kiosks among others. Olo’s front-end UX for web and mobile can be used as is or customized by using API’s. Switchboard services ensure that phone orders are integrated with digital interfaces that run alongside existing call center infrastructure. Furthermore, a client can include features such as loyalty schemes and brand-specific functionality.
As part of its delivery solutions, the Company enables delivery from sites and apps and offers certified bi-directional integration with third-party marketplaces. The platform offers clients the flexibility to choose providers, transit time, delivery fee limits, pricing, and subsidy. The platform facilitates the submission of delivery bids in real time and matching the best courier that conforms to a client’s conditions. OLO’s Point-to-point transit time is less than 12 minutes on average.
The platform can handle thousands of orders per minute during peak hours and is PCI Level 1 and SOC 1 Type 2 Certified. Besides offering security and reliability, the technology is also scalable. Some of the features include order management and control, complete synchronization with POS, payment, delivery, loyalty and CRM systems.
The Company mainly targets established food chain restaurants that have some amount of digital presence such as sweetgreens and Shake Shack. Olo caters to more than 400 multi-location restaurant brands like the Cheesecake Factory, Denny’s, El Pollo loco to name a few.
In December 2021, the Company entered into a partnership with Lyft, to deliver digital orders for Olo’s network of restaurant brands. The move not only increase the delivery coverage for its brands but also results in a more competitive pricing. Olo has extended its partnership with Uber to integrate its Uber Direct technology into Olo’s delivery fulfillment solution, with plans to support alcohol delivery.
In October 2021, the Company acquired Wisely Inc, a customer intelligence platform that helps personalize guest experience, for approximately $187 million, which included $77 million in cash and approximately 3.69 million shares of Olo’s Class A common stock.
As per its Q3, 2021 financial results, the Company reported total revenue of $37.4 million, an increase of 36% YoY, while the platform revenue grew by 38% year-over-year to reach $36.1 million. In addition, the gross profit increased 29% year-over-year to $29.2 million, constituting 78% of total revenue. The cash and cash equivalents were $597.7 million. Key metrics like Average revenue per unit (ARPU) increased 8% year-over-year to approximately $484., while Dollar-based net revenue retention (NRR) remained over 120%.
Photronics, Inc (NASDAQ: PLAB)
Market Cap: $1.06B; Current Share Price: 17.36 USD
Data by YCharts
Photronics, a pioneer in photomask products and services and technologies, provides leading-edge technology solutions that are incorporated into mobile devices, PCs, TVs, displays. The technology supports both integrated circuits (IC) and flat panel displays (FPD). The Company has 11 facilities located across Asia, North America and Europe, which manufacture high-end & mainstream semiconductors, logic and memory components, flat panel displays, LCD, AMOLED among others.
Photomasks are an essential component for semiconductors and are expected to reach $4.97 billion by 2026, growing at a CAGR of 2.5%, from $4.00 billion in 2019, according to a report. Photronics has established itself as a trusted source of masks, addressing the need of rapidly growing demand for IC photomasks. The Company offers local manufacturing, cutting-edge technology and exemplary customer service.
The Company’s products find place in numerous industries ranging from consumer electronics to medical devices. Photoronic’s advanced solutions include binary masks with optical proximity correction (OPC), phase-shift masks and special-purpose masks, such as optical gratings. In addition, the Company also manufactures 6-, 9- and 14-inch large area masks for use in customer manufacturing and R&D needs, including calibration and equipment components.
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Photonics has set its sights on making a mark in China, with expansion plans and a target to achieve “Made in China” by 2025. The business in China is growing at an impressive rate and constitutes 37% of total revenue in 2021. The Company’s IC JV has not only helped it to compete more effectively but also accelerated growth. The Company wants to leverage its technology leadership in AMOLED and its strong global footprint to capitalize on growth in “legacy foundry” businesses. The Company is targeting an EPS growth of more than 50 percent and is currently growing more quickly than the market. The Company is increasing prices in Europe and Korea and has implemented double digit increases in Taiwan and China. It is actively exploring strategic partnerships opportunities as well.
The revenue for 2021 was $663.8M, with IC and FPD both achieving record revenues and increasing by 10% and 6%, respectively. Net Income was up 67% at $59.4M, with the 4-year CAGR at 46%. The Company had a cash balance of $277M and returned 100% of free cash flow to investors through share repurchases. The Company is strategically using the cash to fund growth and is focused on creating accretive growth.
Senseonics Holdings, Inc. (NYSE: SENS)
Market Cap: $ 1.19B; Current Share Price: 2.67 USD
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Senseonics Eversense is the only-FDA approved, long-term continuous glucose monitor which offers features such as an implantable sensor, a mean absolute relative difference (MARD) of 8.5 percent, detachable transmitter, MRI compatible sensor among others. The system was approved by the FDA in 2018 and has constantly been adding new features and functionalities. Eversense CGM helps in better diabetes management, detects 95% of hypoglycemic and 99% of hyperglycemic events and has shown to reduce A1c by 0.5%.
The Company is anticipating the approval of its New Eversense 180-day sensor and is preparing a submission for Investigational Device Exemption (IDE) for its 365-day sensor.
In August 2020, the Company also entered into a strategic partnership with Ascensia Diabetes Care, the global leader in blood glucose monitors. Ascensia has signed a commercialization and collaboration agreement with the company, which makes it the exclusive worldwide distributor for Senseonics’ Eversense® CGM systems. Senseonics has also entered into a concurrent financing agreement with PHC Holdings Corporation, the parent company of Ascensia for up to $80 million of debt and equity capital.
The deal helps to combine the relative strengths of both the companies, with Ascensia having more than 80 years of experience in diabetic care products and a presence in more than 125 Countries worldwide and global sales of approximately $1B. Senseonics will retain all product development, branding, regulatory approval and manufacturing responsibilities. The Companies are gearing up for the launch of New Eversense 180D (US and Europe), which is pending FDA approval, by preparing the groundwork for launch and patient initiation.
The Company has extensive commercial and medicare coverage with companies like Aetna, Bluecross Blueshield Horizon NJ health, Tricare and the U.S Department of Veteran Affairs among others, with over 200 million lives covered since its launch in 2018.
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According to the International Diabetes Federation, the number of people living with diabetes will rise to 629 million by 2045, from 425 million adults (20-79 years) in 2017. In the U.S alone the people living with diabetes are set to increase from 58 million in 2017 to 67 million by 2045. Non-Invasive blood glucose monitoring offers a painless and more convenient alternative to monitoring glucose levels. According to a report by Coherent Market Insights, the global market for non-invasive blood glucose monitoring devices which were worth over US$ 5.1 million in 2017 will grow at a CAGR of 35.0% from 2018 – 2026. The ease and convenience of using the device, elimination of costly finger sticks and speedy transfer and sharing of data are some of the drivers of popularity of these devices, while the point of accuracy being lesser than conventional glucose monitoring devices may hamper its growth.
Information Services Group, Inc. (NASDAQ: III)
Market Cap: $316.50M; Current Share Price: 6.46 USD
Data by YCharts
Information Services Group (ISG) is a premier technology research and advisory firm that provides digital transformation services to more than 700 blue chip clients including, including some of the topmost organizations in the world. The Company’s services include cloud and data analytics, automation, risk management, strategy and operations design and market intelligence among others. ISG offers these services to various entities across the globe such as public sector organizations and private corporations in the aerospace and defense, automotive, banking, and financial services, healthcare, retail, and telecommunication sectors to name a few.
The Company owns and operates multiple brands such as ISG INDEX, ISG Momentum, ISG ProBenchmark, ISG Relationship 360 (Research); ISG GovernX, ISG GovernX Contract Lifecycle, ISG GovernX – Spend Management (Third Party Management). ISG offers products such as ISG Inform (IT benchmarking solution), ISG Momentum Contract KnowledgeBase (a database of outsourcing contracts) and ISG GovernX – Risk Monitor (real-time supplier alerts) and ISG ProBenchmark (IT price benchmarking).
The advent of smartphones, the impact of the pandemic and increasing adoption of cloud storage solutions are compelling organizations to digitalize their services, to cater to new-age customers, who rely greatly on online platforms for their needs. According to a report by IDC, the worldwide spending on digital transformation products and services is likely to reach $2.3 trillion in 2023, growing at a CAGR of 17.1% from 2019 to 2023.
An increasing number of organizations are now focusing on their digital customer experience, and are using big data analytics, to generate actionable insights that will lead to better customer understanding, improved engagement and loyalty. However, increasing concerns about data security and privacy, network vulnerability and challenges with integrating legacy systems with new age systems may hamper the growth and adoption of digital platforms. The evolution of technology is also contributing to the rising popularity of digitization, with Artificial Intelligence, Machine learning, IoT and blockchain simplifying the complexities of Digital Transformation.
To meet the growing demand for digitalization, the Company has created two solution areas namely, ISG Digital and ISG Enterprise that help companies in areas such as XaaS, cyber security, enterprise agility and transformation, global business operations, technology adoption and cost optimization.
During 2021, the Company earnings per share (EPS) grew by 287%, while its share price grew by 132%. As of September 2021, the Company’s revenue was $275M, with more than 50% coming through digital. The consulting utilization increased by 400 bps to 74%, while the revenue growth was up 14% as compared to the same quarter the previous year. The EBITDA margins improved 230bp to 13.7% YTD.
Over the next three years the focus is on growing revenues by high-single digits and achieving recurring revenues of more than $100M. ISG’s addressable market is the $1 trillion global services industry and $100 billion sourcing industry.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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References
https://www.olo.com/solutions/platform
https://www.alliedmarketresearch.com/photomask-market
https://photronicsinc.gcs-web.com/static-files/2467dfb9-56b0-4875-b841-320c1974c96a
https://www.ascensiadiabetes.com/eversense/eversense-cgm-system
https://www.senseonics.com/investor-relations/news-releases/2022/01-04-2022
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