The Zacks Computer and Technology sector has demonstrated remarkable resilience with 24.2% year-to-date growth in 2024, outperforming both the tech-heavy Nasdaq composite and the broader S&P 500 index’s increases of 20.8% and 20.6%, respectively.
This outperformance can be attributed to several key factors. The continued adoption of artificial intelligence and machine learning across industries has fueled demand for advanced semiconductors, cloud computing services, and software solutions, benefiting companies at the forefront of these technologies. Additionally, the ongoing digital transformation initiatives by businesses worldwide have sustained high demand for enterprise software, cybersecurity solutions, and IT services.
The sector has also seen strong performance from companies involved in the 5G infrastructure rollout and the Internet of Things (IoT), as these technologies become increasingly integral to both consumer and industrial applications. Furthermore, the gaming and entertainment subsector has thrived, driven by advancements in virtual and augmented reality technologies.
Many tech companies have demonstrated improved profitability and cash flow management, addressing previous concerns about valuation and sustainability. This financial discipline, combined with innovative product offerings and strategic acquisitions, has bolstered investor confidence in the sector’s long-term growth prospects.
As we move forward, the technology sector’s leadership in emerging fields such as quantum computing, edge computing, and sustainable tech solutions positions it well for continued outperformance, making it an attractive option for investors seeking growth and innovation in their portfolios. While many high-profile tech stocks trade at premium prices, there are still opportunities to find promising companies with more accessible share prices.
Per the Zacks’ proprietary methodology, stocks with the combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer solid investment opportunities. The Growth Style Score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth. You can see the complete list of today’s Zacks #1 Rank stocks here.
Based on this, we explore four top-ranked tech stocks, Similarweb SMWB, VTEX VTEX, PagerDuty PD and Compass COMP, each trading under $20 that show strong potential for gains in 2025.
While these stocks trade under $20 and can be more volatile than their costlier peers, strong bottom-line projections and positive estimate revisions in recent times point toward momentum in the near term.
The chart below shows the price performance of our four picks year to date.
Image Source: Zacks Investment Research
Similarweb is a website that provides web analytics services for businesses. The stock offers compelling value in 2025, fueled by the surging demand for digital intelligence. The company’s AI-driven analytics platform and diverse client portfolio across industries position it for robust growth. Its recurring revenue model and high customer retention rates ensure stability, while continuous innovation keeps it ahead of market trends. As businesses increasingly rely on data-driven decisions, Similarweb’s comprehensive insights into online behaviors and competitive landscapes become indispensable. With digital transformation accelerating globally and the company’s strategic expansion into new markets, Similarweb presents an attractive investment opportunity in the thriving digital intelligence sector.
The stock is currently priced at $8.5 and has a Growth Score of A. The Zacks Consensus Estimate for this Zacks Rank #1 company’s 2024 earnings has moved north by 80% to 18 cents per share in the past 60 days.
VTEX offers a software-as-a-service digital commerce platform for enterprise brands and retailers. It benefits from an accelerating e-commerce sale globally, which is anticipated to hit $8 trillion in 2027. VTEX’s expanding clientele bodes well for its prospects. More than 28,500 monthly active users access the VTEX developer portal. Expanding international footprint, including a presence in countries like Australia, Brazil, Chile, Colombia, Mexico and Portugal, is noteworthy. VTEX has active online stores in 43 countries. A rich partner base that includes TikTok and Pinterest is noteworthy. The TikTok partnership has helped VTEX expand in Latin America. The Pinterest partnership now helps VTEX reach more than 500 million monthly active users.
The stock is currently priced at $7.44 and has a Growth Score of A. The consensus estimate for this Zacks Rank #2 company’s 2024 earnings has moved north by 133.3% to 7 cents per share in the past 60 days.
Pagerduty provides digital operations management solutions. It is benefiting from the growing need for efficient incident response and digital operations management. The company’s AI-powered platform is well-positioned to capitalize on the increasing complexity of IT environments and the shift toward cloud-native architectures. PagerDuty’s expanding customer base, high retention rates and consistent revenue growth demonstrate its strong market position. With organizations prioritizing operational resilience and automation, PagerDuty’s innovative solutions for real-time operations are becoming indispensable. The company’s strategic focus on AI/ML enhancements and expansion into new markets further bolsters its growth potential in the evolving digital landscape.
The stock is currently priced at $18.05 and has a Growth Score of A. The consensus estimate for this #2 Ranked company’s fiscal 2025 earnings has moved north by 2.9% to 70 cents per share in the past 60 days.
Compass provides an end-to-end platform for residential real estate agents to deliver service to seller and buyer clients. The company’s technology-first platform continues to disrupt the traditional real estate market, attracting top agents and streamlining transactions. Compass’ expanding market share, particularly in luxury markets, positions it for strong growth. The firm’s focus on AI-driven tools and data analytics provides a competitive edge, enhancing agent productivity and client satisfaction. With the housing market showing signs of recovery and Compass’ strategic cost-cutting measures improving profitability, the stock presents significant upside potential in the evolving real estate technology sector.
The stock is currently priced at $6.07 and has a Growth Score of A. The Zacks Consensus Estimate for this Zacks #2 Ranked company’s 2024 earnings has narrowed by a penny to a loss of 38 cents per share in the past 60 days.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Compass, Inc. (COMP) : Free Stock Analysis Report
PagerDuty (PD) : Free Stock Analysis Report
Similarweb Ltd. (SMWB) : Free Stock Analysis Report
VTEX (VTEX) : Free Stock Analysis Report
