Many investors would argue that small-cap stocks are more nimble than their large-cap counterparts, making them quicker to adapt to economic downturns and periods of recovery.
That's particularly true in the case of small-cap tech stocks, where innovation and flexibility provide opportunities for rapid growth.
Small-cap tech stocks may provide significant opportunities for investors, but the trick is determining which ones are primed for growth. For Mark Conley, director of research at Broadpoint AmTech, companies with strong product cycles are especially attractive.
"The companies with the better products are always going to gain share," he said in an interview with CNBC.
"As some of the bigger technology companies have less room to grow, they will look for potential acquisition candidates. The logical companies to acquire are the ones gaining the most and with the best products."
So which small-cap tech stocks have attractive prospects? For ideas, we crunched some numbers on institutional flows and identified a few standouts (data sourced from Reuters).
These are the tech stocks hedge funds are buying like crazy -- what do you think of them? (Click here to access free, interactive tools to analyze these ideas.)
1. eMagin Corp
2. AudioCodes Ltd
3. GSI Technology
4. Westell Technologies
5. Axcelis Technologies
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research. Note: The numbers on top of items represent the forward P/E ratio, if available.
Kapitall's Eben Esterhuizen does not own shares of any companies mentioned.
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