2 unknown tech stocks that could skyrocket in the next year

Finding relatively unknown stocks can sometimes be a chore, as we have our eye on the companies with the largest market capitalizations. So if you're looking for a stock that not everyone is familiar with and may offer interesting growth potential, this text is for you.

1. Adtran Holdings $ADTN-1.3%

The company is in the business of providing end-to-end network solutions for communications service providers. Its largest markets can be found in the US, UK or Germany. The company's business consists of two main segments: network solutions, services and support.

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The stock last traded at $18.97, down 17% from the beginning of the year. We don't have a PE ratio for the past 12 months, as the company ended last year in the red. However, the forward PE stands at 21.4. Interestingly, even though the company regularly ends up in the red, it still pays dividends every year since 2003. The dividend is now $0.09 per share, giving the company a 1.9% dividend yield.

Last year, the company had revenue of $563 million, up 11.15% from 2020. Gross profit was $218.4 million, which represents a 38.79% gross margin, but that margin has been declining slightly over the past few years. As we already know, the company ended last year in a loss of $8.6 million. Despite the company's loss-making nature and negative free cash flow, however, the company has reduced its total debt significantly, down to $5 million last year. Net debt has been negative for a long time, which is a positive.

Total debt value since 2014, source: Koyfin

Why might the company, and with it the share price, rise? Last August, Adtran announced a merger with German firm ADVA Optical Networking, which makes fiber optic and Ethernet solutions for providing data, storage or voice services. The merger was subsequently completed this July. The company expects to see significant revenue growth and improved competitiveness as part of the global expansion of fibre optics. In any case, it is questionable whether it is a good move to undertake an expansion into the European market this year.

Analysts rate Adtran quite positively. 6 out of 7 Wall Street analysts who have rated the company in the last 3 months would buy the stock. One analyst would only hold it. In a quantitative assessment from Seeking Alpha, the stock is rated 4.44, which is on the borderline of a Buy and Strong Buy rating.

2. Aspen Technology $AZPN-1.1%

The company is a leading global provider of software and artificial intelligence solutions that optimize the design, operation and maintenance of assets for the world's largest oil and gas companies. It helps to improve process-oriented facilities. This leads to reduced capital intensity, increased working capital efficiency and improved margins. Aspen Technology's customers include Chevron, ExxonMobil, and Shell.

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The stock ended the last trading session at $232.67, up 53% from the beginning of the year. Looking at a longer-term chart, we can see an increase of even 270%. As in the case of Adtran, we don't have a PE ratio for the last 12 months. However, the forward PE is at 35.5.

Last year the company made a total of $300.6 million, a solid 130% growth over 2020. Gross profit was $137.6 million last year. We can notice that the gross margin is trending downward. The company ended last year with a loss of $20.6 million. Unlike Adtran, Aspen has been able to steadily generate free cash, which was at $46.9 million last year .

Summary of financial results, source: Koyfin

The company's merger with Emerson Electric's OSI Inc. and Geological Simulation Software businesses is offered as a reason for the company's continued growth.In total, the deal was worth $6 billion. Aspen is now 55% owned by Emerson Electric. This merger will allow room for greater expansion and a better chance of fulfilling the potential in the promising industrial software sector, which represents a $60 billion market.

What do analysts think? From Wall Street's side, the situation looks a bit indecisive. Out of the 8 analysts who have rated the company in the previous 3 months, 4 have given a Strong Buy rating and 4 have given a Hold rating. In a quantitative assessment from Seeking Alpha, Aspen was given a rating of 3.33. This implies a Hold rating, with a slight lean towards a Buy rating.

Have you known any of these companies before? If not, did Adtran Holdings or Aspen Technology interest you in any way? 🤔

Disclaimer: This is not an investment recommendation

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