Look to small-cap stocks.

The mega-cap FANG group of popular U.S. tech stocks has had a tremendous run throughout the past decade, delivering huge returns for long-term investors. However, many of these large-cap stocks have started to become victims of their own success. High penetration has led to slowing growth rates and market dominance has led to increased antitrust scrutiny from regulators. Investors looking for tech stocks that have plenty of room to grow and likely won’t draw the attention of regulators can look to the small-cap tech space. Here are seven small-cap tech stocks to buy, according to CFRA.

Next:BlackBerry (ticker: BB) Credit

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BlackBerry (ticker: BB)

Just a few years ago, BlackBerry was the punch line to a joke about the market dominance of the Apple (AAPL) iPhone. Today, BlackBerry is a far cry from a smartphone maker. BlackBerry has become an enterprise mobile device management software company, and analyst Angelo Zino says sales are growing, margins are rising and BlackBerry is finally on the right track once again. The February acquisition of artificial intelligence and cybersecurity company Cylance should help BlackBerry grow revenue by 25% in fiscal 2020. CFRA has a “buy” rating and $12 price target for BB stock.

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Look to small-cap stocks.

The mega-cap FANG group of popular U.S. tech stocks has had a tremendous run throughout the past decade, delivering huge returns for long-term investors. However, many of these large-cap stocks have started to become victims of their own success. High penetration has led to slowing growth rates and market dominance has led to increased antitrust scrutiny from regulators. Investors looking for tech stocks that have plenty of room to grow and likely won’t draw the attention of regulators can look to the small-cap tech space. Here are seven small-cap tech stocks to buy, according to CFRA.

BlackBerry (ticker: BB)

Just a few years ago, BlackBerry was the punch line to a joke about the market dominance of the Apple (AAPL) iPhone. Today, BlackBerry is a far cry from a smartphone maker. BlackBerry has become an enterprise mobile device management software company, and analyst Angelo Zino says sales are growing, margins are rising and BlackBerry is finally on the right track once again. The February acquisition of artificial intelligence and cybersecurity company Cylance should help BlackBerry grow revenue by 25% in fiscal 2020. CFRA has a “buy” rating and $12 price target for BB stock.

Canadian Solar (CSIQ)

CFRA includes several solar companies in its top small-cap stock ideas, and solar panel producer and solar solutions company Canadian Solar is among them. Zino recently upgraded Canadian Solar, thanks to the company’s improving margin profile and the stock’s attractive valuation. Zino is anticipating solar panel demand in both the U.S. and China will begin to rebound in the second half of 2019, potentially creating a short-term supply shortage that could boost prices and open the door for upward earnings estimate revisions. CFRA has a “buy” rating and $22 price target for CSIQ stock.

3D Systems Corp. (DDD)

Long-term 3D Systems investors got burned back in 2014 and 2015 when the 3D printing industry didn’t take off. However, Zino upgraded 3D Systems last month and says the market has simply gotten too negative on the battered stock. In addition to weakness in the stock, 3D Systems’ short interest as a percent of float is up to 21%. Zino says intense competition will weigh on margins, but consensus estimates have set a low bar to clear for the rest of 2019. CFRA has a “buy” rating and $10 price target for DDD stock.

JinkoSolar (JKS)

JinkoSolar is a solar panel designer and manufacturer headquartered in China. Zino upgraded Jinko along with Canadian Solar on expectations that solar market demand may improve significantly in coming quarters. Zino says Jinko’s recent $150 million capital raise will help the company expand its production capacity and depreciation of the Chinese renminbi could help stimulate demand for Chinese panels. After a weak couple of years, CFRA is projecting 1.3% sales growth in 2019 and 2.3% sales growth in 2020. CFRA has a “buy” rating and $24 price target for JKS stock.

Proofpoint (PFPT)

Proofpoint is a leading cybersecurity company that is best known for its dominant market share in email security. Proofpoint serves more than half of the Fortune 1000 companies with its email security products and services. Analyst Keith Snyder says the security-as-a-service market has at least five more years of rapid growth ahead that should serve as a tailwind for Proofpoint’s business. Targeted email attacks are one of the most common ways hackers attack companies and companies simply can’t afford the risks associated with these vulnerabilities. CFRA has a “buy” rating and $140 price target for PFPT stock.

SunPower Corp. (SPWR)

Like other solar power companies, Zino says SunPower will benefit from positive demand dynamics in coming quarters. However, he says SunPower’s shift toward residential and commercial offerings and its exemption from tariffs differentiate it from other small-cap solar stocks. The rollout of SunPower’s high-efficiency panels should help it win market share over time and improvements in cost-per-watt in SunPower’s next-generation panels should improve the company’s margin profile. Finally, Zino says SunPower made the right choice to exit its unprofitable businesses and improve its balance sheet. CFRA has a “strong buy” rating and $10 price target for SPWR stock.

New Relic (NEWR)

New Relic provides a cloud-based analytics platform that allows customers to collect, store and analyze massive amounts of data. Analyst John Freeman says New Relic is the most exciting play in application performance monitoring, a field that is rapidly evolving into a must-have tool for technology executives. Freeman says New Relic has the third-largest market share in the space, but it is the fastest growing among the top 10. Freeman says New Relic’s performance is reminiscent of how Salesforce.com (CRM) revolutionized customer relationship management. CFRA has a “strong buy” rating and $151 price target for NEWR stock.

Small-cap stocks to buy now:

BlackBerry (BB)Canadian Solar (CSIQ)3D Systems Corp. (DDD)JinkoSolar (JKS)Proofpoint (PFPT)SunPower Corp. (SPWR)New Relic (NEWR)1 of 10

Wayne Duggan, Contributor

Wayne Duggan has been a U.S. News & World Report contributor since 2016. He is an expert at ...  Read more

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