A lot of these big name tech stocks have huge valuations. However, there are a bunch of smaller tech companies with a lot of potential to really “disrupt” the innovation scenario. Here is a pick of three stocks which have the potential for huge future growth driven by their innovative technologies and good financials.
IPG Photonics Corporation (NASDAQ:IPGP): Fiber laser technology
IPG Photonics Corporation (NASDAQ:IPGP) is number eleven on the Forbes list of America’s best small companies. IPG Photonics manufactures fiber lasers, fiber amplifiers, and diode lasers that have numerous applications in diverse industries.
Disruptive innovation
The fiber laser technology of IPG Photonics Corporation (NASDAQ:IPGP) has the potential to become a disruptive innovation in the materials processing industry, as fiber lasers are poised to replace gas cutters and welding machines. Since no additional inputs in the form of gases or metals are required to operate fiber lasers, their cost of operation is considerably less than gas cutters and welding machines.
Vertically integrated company
IPG Photonics is a vertically integrated company having presence in the complete value chain of the fiber laser industry. This gives it more flexibility in demand forecasting and managing its working capital. It also gives an edge to the company in meeting future demand better than its competitors.
Growing Market
The total laser market is expected to reach $4.7 billion in 2015 from $ 3.78 billion in 2011. The fiber laser’s market share of 15% in the total laser market in 2011 is expected to reach 28% in 2015. The volume of the fiber laser market is expected to reach $1.37 billion in 2015 from $ 588 million in 2011. The figures clearly show a huge and increasing demand for fiber laser in the future and IPG Photonics, being the market leader in fiber lasers, has a great growth opportunity.
Strong financial and stock performance
IPG Photonics Corporation (NASDAQ:IPGP)‘ revenue increased 19% and net income increased 23% in 2012. The company reported gross margin of 54.2% and operating margin of 37.1%, which indicates the company’s solid profitability. Earnings per share has increased 29% per year over the past five years, and IPG Photonics reported an EPS of $2.81 in 2012.
The stock of the company is currently trading at the price level of $61.33, and has increased more than 50% from the level of $40 touched in July 2012. With a market capital of $3.15 billion, IPG Photonics Corporation (NASDAQ:IPGP) is the largest company in the fiber laser industry.
Future investment for growth
IPG Photonics is strengthening its product portfolio to drive future growth. It has acquired Mobius Photonics, which is a specialist in UV fiber lasers. This acquisition is a perfect fit for IPG Photonics as it will enable it to offer UV fiber laser at a more competitive price level.
IPG Photonics Corporation (NASDAQ:IPGP), with a unique and growing business, strong financials, and a positive future outlook is a sure shot buy for the long-term for any investor looking for great future returns in the technology sector.
Corning Incorporated (NYSE:GLW): Willow glass
Corning Incorporated (NYSE:GLW) operates in specialty glasses and fiber optics. What’s interesting about this company is the innovations it has done in the glass technology for display devices. Its innovative glasses have the potential to transform the display industry. Its importance can be judged from the fact that Apple is using Corning’s glasses in its smartphone and tablet displays.
Corning Incorporated (NYSE:GLW)’s Gorilla glass is a durable cover glass which has been used in more than 1 billion displays. Its resistance to heavy damage has contributed in its widespread use.
New growth opportunity
The recently launched Corning Willow glass has the potential to create new market opportunities for Corning Incorporated (NYSE:GLW). The Willow glass possesses the characteristics of being flexible, strong, and thin. Its features enable it to be used in devices with curved and flexible displays. The next generation displays is a high growth market and can result in huge revenue for Corning.
The exponential growth in the sales and demand for smartphones and tablets has created a huge demand for display glasses. Corning Incorporated (NYSE:GLW), with its willow glass, has the potential to produce thin displays for both Organic Light Emitting Diodes (OLED) and liquid crystal displays (LCD).
The stock of Corning Incorporated (NYSE:GLW) is currently trading at $13 and has a good dividend yield of 2.76%. In 2012, the operating margin increased 16.16% and the net profit margin jumped 21.57%, signifying the financial soundness of the company.
The growth potential and good financials make this company a good buy.
SanDisk Corporation (NASDAQ:SNDK): NAND and SSD technologies
SanDisk Corporation (NASDAQ:SNDK), a pioneer in NAND technologies, provides data storage solutions. SanDisk Corporation (NASDAQ:SNDK) is poised to grow with growth in the demand for Solid-State Drives (SSD). The market for enterprise SSDs is expected to grow 59% annually till 2016. This is expected to increase SSD revenue from $582 million in 2011 to $3.5 billion in 2016. SanDisk, being a key player in the SSD market, has a big opportunity to grow its revenue going forward.
External storage devices also offer a strong growth potential for SanDisk Corporation (NASDAQ:SNDK). With the increase in the penetration of smartphones and other digital devices, the demand for external memory cards has increased. The demand for memory cards is projected to increase further in the future.
The stock of SanDisk Corporation (NASDAQ:SNDK) is currently trading at the level of $52 and has a good EPS of 1.92. SanDisk Corporation (NASDAQ:SNDK) is a buy for the long-term because of its strong growth margins and positive growth outlook due to the increase in the demand of solid-state drives.
Conclusion
IPG Photonics Corporation (NASDAQ:IPGP), Corning Incorporated (NYSE:GLW), and SanDisk Corporation (NASDAQ:SNDK) are three tech stocks whose business outlook is positive. These companies have the potential to create disruptive innovation in their respective industries. The companies also have sound financials to invest in their future.
The growth in the demand for the underlying technology used by these companies will drive their future growth. Investors looking for good technology stocks should buy these stocks right away.
The article Why You Would Want to Buy These Tech Stocks Right Now originally appeared on Fool.com and is written by Shas Dey.
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