With many traders ignoring equities below five dollars, there is serious upside for those willing to take on additional risk.
The following stocks have strong indications for growth -- including insider and institutional buying, revenue growth, and expanding industries:
Mandalay Digital (NASDAQ:MNDL) creates solutions for mobile platforms. These include tools to complete the billing process, drive loyalty and predictive analytics for merchants to suggest products.
Shares crashed in August, kicking off a series of non open market acquisitions from several directors. In addition, institutions started aggressively building positions and now own just over a fourth of the company.
Taking a look at the financial statements, revenue has grown a tremendous 766 percent over the past year to nearly seven million dollars for the most recent quarter. However the company has become increasingly less profitable -- losing $3.78 million a year ago and $6.22 million for the same quarter this year. A key reason for the increase in loss is an additional two million spent on product development.
The two factors that will drive the 2014 share price are continued revenue growth and an increase in dependence on mobile technologies. Shares are currently trading at $2.65.
Revolution Lighting Technologies
Revolution Lighting Technologies (NASDAQ:RVLT) produces LED products for commercial customers, typically in the hospitality, education, and healthcare industries.
The LED industry is expected to almost double by 2015, giving Revolution the opportunity to capture considerable market share. A key reason why the company stands to over take its competitors is its expansive dealer network, providing reach to an expansive group of customers. Because its products are more energy-efficient than many of its competitors, education is a key competitive advantage.
Several directors and officers added shares in 2013 with buys and non open market acquisitions. Institutions and mutual funds, who own nearly 58 percent of the float, added 23.32 and 39.9 percent, respectively.
Revolution’s position to capture a significant portion of the growing LED market is a reason for significant upside in share price. After bouncing off $5.50 in July, shares are now trading at $3.28.
Support.com (NASDAQ:SPRT) IPO’ed in the middle of 2000 with a market cap around two billion. Shares subsequently plummeted in 2001 during the tech bubble collapse. Support.com builds SaaS tools for small business to grow revenue and increase the customer experience. The company also offers premise services such as computer installation and maintenance.
Year over year revenue is up 28.5 percent, driven primarily by the service business. Despite the impressive earnings growth, when looking at financial statements, increase in income stands out. Earnings jumped from 298 thousand to 3.03 million in a just a year, as the cost of goods sold rose far less revenue. SG&A expenses also saw far less of a climb. This earnings report shocked Wall Street as it doubled the estimate.
Institutions who own more than 80 percent of the float are continuing to add shares this quarter after consistent additions last quarter.
Continued demand for software solutions and investor interest in cloud-based companies are catalysts likely to push Support.com higher during 2014. Shares are currently trading at $3.68.
Vringo (NASDAQ:VRNG) is a patent litigation company currently defending patents related to search.
The company has several sources of income available for 2014. First, the company won its case against Google (NASDAQ:GOOG) in November of 2012.
As the legal process drags on, investors are waiting for Judge Raymond Jackson of the Eastern District Court of Virginia to award Vringo its payment. They key figure to watch is not only the lump sum but also a percent of royalties for the Google’s future North American revenue.
Second, the company is engaged with Chinese telecommunications company, ZTE, in several European countries. In December 2013 its Indian division was forced to hand over additional information and Vringo won an injunction in Germany. These successes makes a global licensing deal likely.
In a 2013 settlement with Microsoft (NASDAQ:MSFT), which is in part dependant the outcome of the Google trial, Vringo received six patents. Investors are still uncertain as to what the patents are, but it shows the company has several growth opportunities after litigation with Google and ZTE.
Shares of Vringo have been incredibly volatile, often fluctuating around the three dollar level. Shares are currently trading at $2.93.
Note: Luke Jacobi is long Vringo.
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