4 Small Cap Technology Stocks That Portfolio Managers Love

Print Email

While it’s not always the best strategy in the world, owning what the top portfolio managers have in their hedge funds and mutual funds is a way to let some of the best minds in the industry do the research for you. In a new research report, Merrill Lynch surveyed some of the top funds and managers to get an idea of what stocks they like the best.

The Merrill Lynch report has a list of the top 25 stocks owned by small-cap growth managers on a percentage of funds that own the specific stocks. We screened that list for technology companies 24/7 Wall Street readers may be familiar with and came up with four outstanding stocks to buy now.

Cavium

This stock has been a Wall Street favorite for some time, and it could be a great addition to portfolios. Cavium Inc. (NASDAQ: CAVM) generates a sizable part of its revenue from the association it has with Cisco Systems with security and multi-core embedded processors. Analysts around the street see the company well positioned with multi-core processor portfolio and design wins in enterprise and service provider markets.

ALSO READ: JPMorgan Says 2 Tech Heavyweights Are the Place to Be Now

Research indicates that Cavium sees its core business outside of wireless growing nicely for the remainder of the year and next year as well. The company’s data center business is being driven by demand for LiquidIO 1 cards at its largest cloud data center customer, and other customers may be on board soon. The Merrill Lynch report indicates that a staggering 43.1% of small-cap funds own this top technology company.

The Thomson/First Call consensus price target for the stock is $69.70. Shares closed Monday at $72.04.

Proofpoint

This top cybersecurity player is also owned by 43.1% of the small-cap funds that Merrill Lynch surveyed. Proofpoint, Inc. (NASDAQ: PFPT) is a leading security-as-a-service provider that focuses on cloud-based solutions for threat protection, compliance, archiving and governance, and secure communications. Proofpoint provides patented technologies and on-demand delivery systems to protect against phishing, malware and spam, and to safeguard privacy, encrypt sensitive information and archive and govern messages and critical enterprise information.

This stock got hit hard recently and is offering aggressive investors perhaps the best entry point since last spring. Last month the company announced the availability of Proofpoint Targeted Attack Protection (TAP) Mobile Defense, providing security teams with the ability to stop malicious Android and iOS mobile apps before they compromise sensitive data. Proofpoint TAP Mobile Defense leverages technology assets recently acquired from Marble Security and extends Proofpoint’s proven threat intelligence and advanced threat protection for email and social media security.

The consensus price target is $76.95, and the stock closed most recently at $58.84.

ALSO READ: After the Sell-Off, 3 Solar Stocks to Buy Now