Nvidia, Tesla, and Palantir have all produced huge stock price gains over the last year. And looking ahead, they could continue to perform well. However, there are smaller, more under-the-radar technology stocks that analysts see offering more potential in the medium term (the next 12 months, or so).
Here’s a look at a UK tech stock that analysts are very bullish on right now.
A hidden gem?
The stock I want to highlight is Beeks Financial Cloud (LSE: BKS), a cloud computing/data company that serves the financial services industry.
Established in 2011, it offers cloud infrastructure solutions designed to help financial institutions connect to exchanges, trading venues, and cloud service providers at a fraction of the cost of building their own technology infrastructure. For investment managers and trading firms, its solutions can lead to far more flexibility.
This company’s listed on the UK’s Alternative Investment Market (AIM) and currently trades for 217p. At that price, its market-cap is about £147m. So it’s a very small business today.
That adds risk to the investment case, but it also means that there’s plenty of room for growth.
Potential for big gains
Now, this stock isn’t as popular as the likes of Nvidia, Tesla, and Palantir. And currently, there are only two brokerage firms covering it (versus more than 50 for Nvidia).
However, looking at those two brokers, the average price target is 335p. That’s around 54% above the current share price.
For reference, analysts don’t see anywhere near as much potential in Nvidia, Tesla, and Palantir. Nvidia’s average price target is only 2% above its current price while the average price targets for the other two are currently below their current share prices.
Strong top-line growth
Analysts’ forecasts should never be relied upon. However, zooming in on Beeks Financial Cloud, I can see why experts are bullish.
For starters, revenue’s rising rapidly as the company signs new customers (this includes the Australian Securities Exchange, Kraken, and the Mexican Stock Exchange). Over the last five financial years, revenue’s climbed from around £7m to £29m.
Note that last month, the firm said it’s expecting 25% revenue growth for the year ended 30 June. That’s an impressive level of growth.
Secondly, the company’s also aid its pipeline continues to grow, with “advanced discussions” taking place with existing and prospective customers across the globe. As a result, management’s confident in continued momentum this financial year and beyond.
“The steady flow of new customer wins, as well as the significant expansion potential across our existing customer base, serve as a testament to the value of our product offerings, our ability to execute on sales, and our established position as a leading technology provider for financial markets.”
Gordon McArthur, CEO of Beeks
30% below its highs
Of course, Beeks isn’t perfect. And one issue for me is that the company continually needs to spend money to build out its infrastructure. This means it’s not as profitable as some other software companies. It also means it could have to raise capital from investors in the future.
Trading 30% below its highs on a price-to-earnings (P/E) ratio of 25 however, I reckon this stock has quite a bit of potential. I believe it’s worth considering today.
