The concerns surrounding the economy slipping into a recession due to tighter monetary policy have driven a broad sell-off in tech stocks, as evident from the benchmark Nasdaq composite index’s 27.4% decline year-to-date. In addition, May’s consumer price index increased 8.6% year-over-year, the fastest advance in more than 40 years. The Fed is also expected to raise interest rates by a half-point next week and another half-point in July.
However, this provides a golden opportunity for investors to add quality tech stocks now trading at attractive valuations. These stocks are expected to rebound in the near term as the ongoing digital transformation, and increasing use of cloud computing, artificial intelligence (AI), and the internet of things (IoT) should keep driving the technology industry's growth. According to Gartner, Inc. (IT), worldwide IT spending is expected to hit $4.4 trillion in 2022, up 4% year-over-year.
Given this backdrop, it could be wise to add quality technology stocks Similarweb Ltd. (SMWB) and Taboola.com Ltd. (TBLA) to your watch list as Wall Street analysts expect these stocks to double in the near term.
Similarweb Ltd. (SMWB)
Headquartered in Tel Aviv, Israel, SMWB provides website traffic solutions through AI-driven data analytics worldwide. It offers four solutions: digital research intelligence, digital marketing, shopper intelligence, and investor intelligence. It serves companies across various industries such as retail, travel, consumer finance, and logistics.
On May 16, 2022, SMWB announced its acquisition of Rank Ranger, a market leader in SEO and rank tracking, trusted by hundreds of companies worldwide. The acquisition expands its capabilities as a comprehensive SEO suite for enterprises by combining its keyword research and analysis capabilities with Rank Ranger’s search term rank tracking.
SMWB’s total revenue increased 25.6% year-over-year to $44.30 million for the fiscal first quarter ended March 31, 2022. Its total assets came in at $280.96 million for the period ended March 31, 2022, compared to $227 million for the period ended December 31, 2021. Also, its loss per share decreased 56.4% year-over-year to $0.34.
For fiscal 2023, analysts expect SMWB’s EPS to increase 10.2% year-over-year. Its revenue is expected to increase 42.7% year-over-year to $196.42 million in fiscal 2022. The stock has lost 33% over the past three months to close yesterday’s trading session at $8.95. However, Wall Street analysts expect the stock to hit $18.50 in the near term, indicating a potential upside of 106.7%.
Taboola.com Ltd. (TBLA)
TBLA operates an artificial intelligence-based algorithmic engine platform internationally. It offers Taboola, a platform that partners with websites, devices, and mobile apps to recommend editorial content and advertisements on the open web to users.
On May 26, 2022, TBLA announced its entry into a definitive agreement to acquire Gravity R&D to advance its AI, SmartBid, and eCommerce personalization. It will also create and invest in a new research and development hub in Gravity R&D’s headquarters in Hungary to accelerate its product development.
TBLA’s revenues increased 17.1% year-over-year to $354.70 million for the fiscal first quarter ended March 31, 2022. The company’s gross profit grew 25.2% year-over-year to $112 million. Also, its adjusted EBITDA came in at $34.90 million, representing a 3.9% year-over-year rise.
Analysts expect TBLA’s EPS to increase 243.5% year-over-year to $0.33 in fiscal 2022. The company’s revenue is expected to increase 205.3% year-over-year to $374.62 million for the quarter ending September 30, 2022. The stock has lost 24.8% over the past month to close yesterday’s trading session at $2.96. Wall Street analysts expect the stock to hit $6.93 in the near term, indicating a potential upside of 134.1%.
SMWB shares closed at $8.88 on Friday, down $-0.07 (-0.78%). Year-to-date, SMWB has declined -50.42%, versus a -17.67% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.
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