2 Popular Software Stocks Under $5 Wall Street Predicts Will More Than Double
With rising demand for advanced software solutions, the industry is expected to achieve solid growth this year and beyond. Hence, Wall Street analysts expect low-priced software stocks Otonomo (OTMO) and...
With rising demand for advanced software solutions, the industry is expected to achieve solid growth this year and beyond. Hence, Wall Street analysts expect low-priced software stocks Otonomo (OTMO) and Exela (XELA) to more than double in price in the near term. So, we think it could be worth adding these stocks to one’s watch list. Read on.
The continuation of remote working and ongoing digital transformation have been helping the software industry grow. Investors’ interest in this space is evidenced by the SPDR S&P Software & Services ETF’s (XSW) 49.7% gains over the past year, versus the SPDR S&P 500 Trust ETF’s (SPY) 38.3% returns.
The growing demand for advanced software products and services by almost every industry should help the software industry continue growing in the coming months. According to Grand View Research, the global business software and services market is expected to grow at an 11.3% CAGR between 2021 - 2028.
Given this industry’s promising prospects, analysts are highly optimistic about the near-term performance of low-priced software stocks Otonomo Technologies Ltd. (OTMO) and Exela Technologies, Inc. (XELA). So, we think it could be wise to add these stocks to one’s watchlist.
Otonomo Technologies Ltd. (OTMO)
Headquartered in Herzliya, Israel, OTMO provides an automotive data service platform and marketplace that enables car manufacturers, drivers, and service providers to be part of a connected ecosystem. The company offers cabin data, engine-related information, maintenance data, data related to the specific vehicles, and driving data.
On October 5, 2021, OTMO announced that it acquired Neura, Inc. The company expects this acquisition to expedite its growth and to contribute positively to its revenue moving forward. Ben Volkow, CEO and Co-Founder of OTMO, said, “The acquisition of Neura reinforces Otonomo’s leadership in the mobility, transportation and automotive data space.”
OTMO announced that it expects to release its financial results for the third quarter, ended September 30, 2021, on November 12, 2021. Ben Volkow said, “We see strong growth in various business verticals, including smart cities and fleets. Additionally, we are excited about our recently announced agreements with Amazon, Salesforce, Leaseplan and other customers.”
Wall Street analysts expect the stock to hit $10.50 in price in the near term, which indicates a potential 128% upside.
Exela Technologies, Inc. (XELA)
XELA in Irving , Tex., provides transaction processing solutions, enterprise information management, document management, and digital business process services worldwide. The company operates through three segments: Information & Transaction Processing Solutions; Healthcare Solutions; and Legal & Loss Prevention Services.
On October 19, 2021, XELA announced that its Digital Mailroom and DrySign offerings delivered another strong quarter of new customers and users, respectively, in the third quarter of 2021. DMR expanded its SMB customer base by 71%, and DrySign boosted its user base by 47% compared to the prior period.
XELA’s gross profit increased 27% year-over-year to $65.90 million for the second quarter, ended June 30, 2021. The company’s adjusted EBITDA increased 18% year-over-year to $43.10 million, while its net loss decreased 60.2% year-over-year to $19.40 million. Also, its loss per share came in at $0.33, down 67.3%.
For its fiscal year 2022, analysts expect XELA’s EPS to increase 93.1% year-over-year. In addition, its revenue is expected to increase 9.3% year-over-year to $343.45 million for the quarter ending December 31, 2021.
The stock has rallied 75.2% in price over the past year to close yesterday’s trading session at $2.03. Wall Street analysts expect the stock to hit $4.50 in the near term, which indicates a potential 121.7% upside.
OTMO shares were trading at $3.91 per share on Thursday morning, down $0.70 (-15.18%). Year-to-date, OTMO has declined -60.70%, versus a 25.90% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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