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Are Small Caps The Growth Stocks For High Tech?

By Jonathan Yates
February 18, 2014 11:12 AM

Yahoo Finance


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When Apple (NASDAQ: AAPL) was trading at over $700 a share in the Fall of 2012, there were no analysts predicting the plunge it would soon take.

There were even calls of Apple going over $1000 a share. With high-tech giants like Apple and IBM (NYSE: IBM) down for 2014, small cap high techs like Q4 Systems (NASDAQ: QFOR) could be the ones providing growth for shareholders.

Everything that makes Apple, IBM and other high-tech giants great is what results in so much potential for growth for Q4 Systems.

The size of IBM and Apple results in lucrative niches. Q4 Systems is doing well with QHIX health insurance exchanges for both the private and public sector. It is not a high tech without earnings: revenue growth is 40 percent on a quarterly basis. Q4 Systems operates in several countries with hundreds of employees and big name clients with a high retention rate.

While the capitalization of Q4 Systems may be small, its performance as a company is not!

Related: Is The Beverage Industry Now Like The High-Tech Sector?

These niches have resulted other promising firms like Q4 Systems, too, that even though not publicly traded, have an impact on stock prices in the sector. This results from these firms depriving Apple, IBM and others of lucrative clients. The other reason, as detailed in a previous Benzinga article about Google acquiring companies, is that some could be takeover targets.

In this group of appealing industry leaders that could be attractive to Google, IBM, Apple, and others are:

  • NRG Global, an innovative Software Quality Assurance firm with user-centric software that allows companies to optimize business applications and IT systems
  • ReviverSoft, which provides resources to repair, optimize and maintain computers Telebroad, which has a cloud-based PBXcellent system for combining phone lines and a phone system
  • Saibot Technologies, an Internet marketing, web development, and Internet business consulting company that was established in 1999, making it royalty for high tech in terms of longevity
  • LiveView GPS, which tracks vehicles to result in efficient logistics for businesses, consumers, government and law enforcement agencies trust.

As detailed previously, small high-tech companies like these are alluring takeover targets.

That is what makes the publicly traded ones like Q4 Systems attractive as investments. Google, IBM, Apple and others recognize that big growth will be coming from small companies in the high tech sector. The acquisitions prove that. Investors should follow that lead into the attractiveness of small cap high techs.