Technology investors, especially those with stakes in the software segment, have enjoyed an outstanding first half of this year. In fact, 2019 is reminding some top Wall Street analysts of the first half of last year, especially in terms of expanding multiples, earnings and sales estimates being revised and how the current cycle in the sector compared to prior peaks.

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A new Deutsche Bank research report is laser-focused on four of the top small/midcap software stocks, which may be the place for aggressive accounts to be positioned for the rest of the year. The report noted this:

Despite the continued pattern of out performance across a cluster of names, we remain selective in terms of our recommendations – favoring those companies with solid competitive positioning selling into large total addressable markets which we think are supportive of more durable growth profiles.

With an average return for some of the stocks in the Deutsche Bank SMID universe of a stunning 40%, multiples are somewhat lofty, so they are selective in what they like going forward. We profile the four top companies they recommended, all better suited for aggressive accounts with higher risk tolerance.

Mimecast

The Deutsche Bank team is very positive on this smaller cybersecurity company. Mimecast Ltd. (NASDAQ: MIME) provides cloud security and risk management services for corporate information and email.

The company offers Mimecast Email Security services, including targeted threat protection that extends traditional gateway security to protect organizations against targeted attacks and audit and reporting, and it enables administrators and security specialists to monitor and report attempted attacks. Mimecast also offers URL Protect, which tackles threats from emails containing malicious links.

Last year the company introduced the latest capability of its Targeted Threat Protection service, Internal Email Protect. It is the first-to-market cloud-based security service providing threat capabilities for internally generated email. Internal Email Protect allows customers to detect and remediate security threats that originate from their users’ email accounts.

The Deutsche Bank price target on the shares is $52, while the Wall Street consensus target is $55.94. The shares closed trading Tuesday at $48.92.

Okta

While probably not a household name, this company could be a target of private equity. Okta Inc. (NASDAQ: OKTA) is an independent provider of identity for the enterprise. The company’s Okta Identity Cloud platform provides identity management solutions that enable customers to secure their users and connect them to technology and applications. It also connects enterprises to their customers, employees, contractors and partners.

The products allow users to access a range of cloud applications, websites, mobile applications and service from various devices. Information technology (IT) organizations use its platform to secure their enterprise and developers use it to build customer-facing websites and applications.

Okta Identity Cloud consists of a suite of products to manage and secure identities. It offers a range of products, such as Adaptive Multi-Factor Authentication, Universal Directory, Lifecycle Management products, Single Sign-On, application program interface Access Management and Mobility Management.

Deutsche Bank has a $152 price target, and the consensus target is lower at $121.41. The shares closed on Tuesday at $134.85.

RingCentral

This smaller cap company also could be a great takeover target. RingCentral Inc. (NYSE: RNG) offers a cloud-based solution for business communications that replaces legacy and expensive on-premise communications systems. It is delivered as an application that follows the user regardless of device (office phone, smartphone, desktop, tablet). Features include voice, text, fax, audio conferencing and integration with document and customer relationship management systems.

For some time, Deutsche Bank analysts have believed the company has multiple catalysts, including continued traction with mid/enterprise customers, increased partner traction, international expansion and continued dislocation in the industry from legacy PBX/UC vendors.

The $135 Deutsche Bank price target compares with the $134.39 consensus target and the most recent close at $121.71.

Twilio

This may be the top stock to own in this fast-growing segment. Twilio Inc. (NYSE: TWLO) provides cloud communications platform that enables developers to build, scale and operate communications within software applications through the cloud as a pay-as-you-go service in the United States and internationally.

The company offers programmable communications cloud software that enables developers to embed voice, messaging, video and authentication capabilities into their applications through application programming interfaces. The company also provides use-case products, such as a two-factor authentication solution.

Deutsche Bank has set its price objective at $160. The consensus target price is $148.52, and shares closed at $142.59 on Tuesday.

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These four red-hot companies also could be poised to beat earnings estimates. It probably makes sense though to buy partial positions and wait to view the actual results. Even if the numbers come in strong, if forward guidance disappoints, that could be an issue, especially for these companies as they have run hard.

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