There’s a saying that you have to turn over a lot of rocks to find a stock that’s worth investing in for the long haul. This is especially true when hunting for unique stocks that aren’t on everyone else’s radar or discussed ad nauseum in the financial press. But locating rare or obscure stocks to buy can pay off handsomely should they end up outperforming the broader market.
Technology stocks are often the best place to look for growth. The sheer size of the sector means there are lots of securities available that are not as well-known but that nevertheless perform strongly for their shareholders. It can take patience and careful due diligence to locate these diamonds in the rough, but they can have a big impact on a portfolio.
Here are three obscure tech stocks to buy that could be the next big thing.
Onto Innovation (ONTO)
You no doubt hear a lot about semiconductor stocks. Unfortunately, Onto Innovation (NYSE:ONTO) is usually excluded from the conversation. That’s too bad because the company and its stock are great success stories. Onto Innovation makes process control equipment and software that is used in the manufacturing of microchips and semiconductors. Not glamorous, but necessary and in demand.
ONTO stock is a long-term market outperformer. The share price is up 58% this year, has risen 128% in the past 12 months, and has increased 677% in the last five years. Back in 2019, the stock was selling for less than $30 a share. Today, it’s changing hands at $228. Analysts currently rate ONTO stock a strong buy with a median price target that is 8.6% higher than current levels. Demand for the company’s products is expected to remain robust.
Lumine Group (LMN)
Lumine Group (CVE:LMN) has only been a publicly traded company for a little more than a year. The serial acquirer of communications and media software businesses was spun-off from Constellation Software (TSE:CSU) in March 2023. Since then, LMN stock has taken off, rising 162% since its market debut, including a 31% gain so far in 2024. The company acquires niche software companies and harvests their cash flow.
The growth in LMN stock has been powered by strong financial results. The company’s revenue rose 95% year-over-year (YOY) to $499.7 million in 2023, while its operating income of $144.7 million was up 115%. Lumine is also extremely profitable with a 91.5% gross margin. Earlier this year, Lumine acquired former mobile phone giant Nokia’s (NYSE:NOK) device management platform business and is now integrating it. So while it might be on a list of obscure tech stocks to buy, it is investing in companies that are anything but.
Commvault Systems (CVLT)
Commvault Systems (NASDAQ:CVLT) is another successful tech stock that is likely unfamiliar to most investors. The company makes data protection and data management software. Commvault’s products provide data back-up and recovery and help companies manage their cloud infrastructure. While it receives little media attention, CVLT stock has been a strong performer.
In the last 12 months, Commvault’s share price has increased 63%, including a 43% gain this year. Over the past five years, CVLT stock has more than doubled (up 132%). The company is relatively small with a market capitalization of less than $5 billion. But its financial results have been strong and outpaced analysts’ estimates. The company most recently reported that its earnings grew 26% YOY while its revenue advanced an annualized 11%, both beating Wall Street forecasts.
On the date of publication, Joel Baglole held a long position in CSU. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
