Beyond the Blue-chips

Three mid-cap tech stocks to buy now

The Nasdaq just closed out its third week of losses.  The index is down about 10% from it’s all-time high on Sept. 2nd.  Big-cap tech is definitely leading the sell-off.  MSFT, AAPL, AMZN and GOOGL are all down more than 10%.  In fact, AAPL is down almost 20%.

The indexes have become so overweight in these mega-cap names that many investors think  it’s time to broaden out where they are invested beyond the cohort of the blue-chip tech companies.  There’s more opportunity now in smaller tech names.  

Development and expansion of the public cloud is one of the major driving forces for tech over the past five years.  It’s well documented how the rise of the public cloud has impacted the mega-cap names.  It’s the platforms that those companies have created that have enabled a new generation of software companies to come up around them.  

Our research team has identified three mid-cap tech stocks that have solid fundamentals and are well poised for growth in the second half of 2020.

Snap Inc. (SNAP)

Snap Inc. is a camera company who aims to empower people to express themselves , learn about the world and have fun together.  Their most popular product is Snapchat, a popular messaging app that allows its users to send pictures and videos. 

One reason we like SNAP is that they have an incredible opportunity in front of them to close the monetization gap that exists between Snap and other public social media companies.  Up to this point, the company hasn’t yet come into its fullness as far as the advertising market is concerned.  But they’re currently improving their ad tech and over the next year we could see a huge re-acceleration in their business as they start executing some of these opportunities.  

Dropbox Inc (DBX)

DBX has been benefitting from the evolving demand for seamless enterprise communication tools.  The company offers a platform that enables users to store and share files, photos, videos, audio files and documents.  Increasing demand for cloud storage, triggered by the coronavirus crisis imposed work-from-home wave, has been acting as a tailwind DBX.  Further, integration with leading apps like Zoom Video, Slack and Atlassian are likely to expand the Dropbox paying user base over the long run.

Anaplan Inc (PLAN) 

Anaplan is positioned for gains from a robust uptick in demand for its cloud-based Connected Planning platform, which enables its users to improve decision-making across finance to supply chains, on a real-time basis.  

The rapid digital transformation that is taking place across all industries is driving the need for efficient planning and data-driven decision-making solutions.  Moreover, current economic weakness has increased the need for companies to optimize their spend patterns.  These factors favor prospects of PLAN, which currently holds a #1 Zacks rating.


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