Big Upside Ahead?
In today’s bloated market, tech companies with solid growth prospects likely have already gotten expensive, which is why this stock stands out.
The stock in question is Adesto Technologies Corp (NASDAQ:IOTS), a semiconductor and embedded systems company headquartered in Santa Clara, California.
Adesto completed its initial public offering (IPO) in 2015, so it’s a relatively new name to stock market investors. And with a market cap of under $190.0 million, it’s not a name that’s frequently mentioned in the news.
Still, for those who want to make a buck from tech stocks this year, Adesto Technologies Corp deserves a serious look.
Adesto Technologies Corp
You see, while Adesto doesn’t get nearly as much attention from financial media as the big-name tech stocks, the company has nonetheless built a position in one of the fastest growing segments in tech: Internet of Things (IoT).
Simply put, IoT is a network of physical objects that can communicate with each other. In order to do that, these objects need to be embedded with electronics, software, sensors, actuators, and connectivity.
And that’s where Adesto comes in. The company’s portfolio of semiconductor and embedded technologies help devices connect and exchange data.
Adesto’s technology is currently being used in a broad range of connected products, including smart utility meters, fitness tracking devices, medical monitors, and building control systems.
And despite being a relatively small company in the tech world, Adesto has built a name for itself.
The company has served more than 2,000 end customers in the industrial, consumer, communications, medical, and computing industries. These include big-name companies such as Samsung Electronics Co Ltd (OTCMKTS:SSNLF, KRX:005930), Johnson & Johnson (NYSE:JNJ), Lenovo Group Limited (OTCMKTS:LNVGY, HKG:0992), and Garmin Ltd. (NASDAQ:GRMN).
The IoT industry is firing on all cylinders. And by being an IoT semiconductor company, Adesto Technologies Corp is well positioned to capitalize on this booming business.
In fact, the semiconductor market for the IoT industry is expected to grow from $11.0 billion in 2018 to $28.0 billion by 2022, translating to a compound annual growth rate of over 25%. (Source: “Analyst Day 2019,” Adesto Technologies Corp, March 12, 2019.)
A look at Adesto’s financials would reveal that the company is already growing rapidly. In 2016, the company generated $44.0 million of revenue, and that grew 27% to $56.0 million in 2017. In 2018, Adesto’s revenue surged another 48% year-over-year to $83.0 million. (Source: Ibid.)
IOTS Stock Chart
Other than for the company’s growing top line, Adesto stock deserves investors’ attention due to a technical breakout on its stock chart.
Chart courtesy of StockCharts.com
As you can see from the above chart, the 50-day moving average of IOTS stock crossed above its 200-day moving average at the end of March. In technical analysis, that’s called a golden cross, signaling the potential of a bullish rally.
What we have here is a semiconductor company that could play a crucial role as we continue in the IoT era. It has a really cheap stock price of around $6.33 at the time of this writing.
And if you compare the company’s market cap to its top-line number from last year, you’ll see that Adesto Technologies Corp is basically trading around 2.3-times its sales. This is a much lower multiple than the vast majority of semiconductor companies today.
Add in the fact that this cheap tech stock has been growing its business at a rapid pace and just had a bullish technical breakout, investors in Adesto Technologies Corp could see a big payday on the horizon.