Wall Street analysts are expecting 50% annual growth over the next five years for this IoT company.
DIGI International (DGII)
From Top Stocks Under $10
I’m ready for a new pick, and here’s why: The small cap universe has lagged the overall market recently, something that’s largely expected in the summer months. But as we get closer to the fall, small cap stocks traditionally outpace major averages, so now is the time for you to get more involved.
Start with a 5% position in DIGI International (DGII, Rated “C-”). This Minnesota-based company is in the hot “Internet of Things” (IOT) space. It makes cellular routers that allow devices to connect over cellular networks, radio frequency Wi-Fi, VPN and other methods, securely and seamlessly.
It also produces ready-to-use solutions for companies to connect to robotic machinery—something that’s on the cutting-edge wave of the future. The company’s products are in high demand from the industry, with customers like AT&T, Verizon, Nasa, and Intel in DGII’s ranks.
Most importantly for you is that it has already gone through the ringer—with a drop of 30% since the start of the year, and about 10% since its last quarterly report. Why? Even though DGII raised earnings guidance and beat expectations, a takeover from fellow IOT company Belden for $14 per share wasn’t taken seriously.
But that’s fine. DGII can go it alone. In fact, it has many more exciting catalysts in the fire:
• Rite Aid Corp. equipped 600 stores with over 3000 of DGII’s pieces of equipment to monitor perishable items in the front of store cases.
• Minnesota Children’s Hospital uses DGII’s devices to monitor lab samples, pharmacy meds, and vaccinations.
• A couple of months ago, the company gained preferred vendor status for one of the top purchasing groups for hospitals in the U.S. The company didn’t disclose the name for privacy’s sake, but that’s big news.
• A major U.S. city initiated deployment of a traffic control communications network to reduce congestion and delays – and no, it’s not Fort Lee, New Jersey!
You get the idea. The company is everywhere, and its devices have real value for companies looking to cut costs, become more efficient, and use the latest technologies. That’s why I think right now, we’ve gotten the worst behind us, and this stock could be setting up for a big move higher.
E-Signal
My upside target is $12.50, while my mental stop area is down around the blue line at $9. Analysts, for what they’re worth, are unanimous in their love for the stock. There isn’t a single “neutral” or “sell” call, and they have an average price target of $14.
Mandeep Rai, Top Stocks Under $10, Weiss Research, Inc.,
www.moneyandmarkets.com/services/trading-services/top- stocks-under- 10,
issues@e.moneyandmarkets.com; 1-800-291-8545, September 19, 2017