Tech stocks are the talk of the town. They are largely associated with growth. In this digital age, the tech geeks are multi-billionaires. You read about stories where people who invested in stocks like Apple and Nvidia 10-15 years back are now millionaires. That was the time when these stocks traded below US$20 after adjusting for stock splits. No time machine can take you back to the early 2010s so that you can pick the right stock and become a millionaire. There are a few tech stocks under $20 that have a shot at building wealth 10-15 years from now.
Two tech stocks under $20
In the world of investing, there is no certainty. Even some of the biggest banks perished in the 2009 Financial crisis. It shows that any stock, small or large, can move in either direction. But when you buy the stock of companies with growth potential at their low, the chances of them surging are high. And your loss is capped at your investment value. Instead of following the market noise, understand why the stock fell and if the company still has the potential to grow.
BlackBerry stock
BlackBerry (TSX:BB) stock has been in a downtrend since 2021, when it became the target of Redditors’ short sale. The cybersecurity and software company has been struggling to make a breakthrough and get a wider customer base. The problem is in the execution and go-to-market strategy. BlackBerry has a new chief executive officer (CEO), John Gamatteo, and hopefully, he can unleash the true potential of the products and enhance the earnings.
The stock has fallen to its 20-year low of $3.66 after the company announced a 3% convertible debenture to raise $175 million to repay its 1.75% convertible debenture maturing in February 2024. This debt restructuring added to its interest expense. Investors are reacting aggressively to any news around debt, as the high-interest environment saw many mid-cap companies with high debt undergo significant restructuring and lose value. But BlackBerry doesn’t have high debt.
However, BlackBerry’s declining revenues due to weak automotive demand and delayed cybersecurity contracts have tested investors’ patience. When the company is at its bottom, there is lower downside risk and higher growth potential. If the new management succeeds in reviving BlackBerry, the stock could surge. And if not, a potential takeover could boost the share price.
Lightspeed Commerce stock
Lightspeed Commerce (TSX:LSPD) is another stock that has come close to its bottom after it fell 31% to $18.4 post earnings. Unlike BlackBerry, the omnichannel platform for retailers and hospitality has been steadily growing its revenue. But most of its revenue is from transactions. It has very little debt and ample cash of $749.4 million to fund future developments.
Lightspeed earns revenue from subscriptions to its platform and a small percentage of the gross transaction volume. The high-margin subscription revenue has been growing moderately. Hence, Lightspeed’s profitability has been at the same level as in 2019, while its revenue size surged more than 14-fold from $57 million in fiscal 2019 to an estimated $895 million in fiscal 2024.
The company has made management changes, with the interim CEO JP Chauvet replacing founder Dax Dasilva. The founder will focus on high-margin subscription revenue. If Lightspeed turns profitable, the stock could return to its long-term growth.
Investor takeaway
The above two stocks have undergone a management change. They have a great product, but a wider reach is lacking. Plus, they are operating in a highly competitive market with larger and stronger players. Investing in these mid-cap stocks at their bottom has an advantage. Their products add value to customers.
Advanced Micro Devices grew severalfold as it caught up to the competition, growing steadily in areas it is good at. BlackBerry and Lightspeed are using their strengths to stay in the race. Hopefully, a fresh perspective can help them overtake the competition and make their mark. Even that could appreciate your capital significantly in a decade.
