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By now, you know that Big Data stocks can be enormously profitable. But you also know that privacy concerns have made them subject to increasing scrutiny. The next scandal or next new law could make their shares nosedive with dim prospects for recovery.
Our Big Data stock pick today sidesteps that issue. And it could easily make you 80% if you buy in today.
This company is not collecting information about your personal Internet searches, the grooming products you've bought, or where you've been today.
And there's no reason to suspect this company is listening to your private conversations, either.
Instead, this Big Data company specializes in business-to-business technology. It connects businesses that buy IT solutions with those that sell IT solutions. In other words, it provides services that its customers actually want - and are willing to pay for. No underhanded, invasive tactics necessary.
Best of all, the market is totally overlooking this stock.
This B2B firm's customers include some of the biggest names in tech services: Amazon.com Inc. (NASDAQ: AMZN), Microsoft Corp. (NASDAQ: MSFT), Alphabet Inc. (NASDAQ: GOOGL), Intel Corp. (NASDAQ: INTC), Cisco Systems Inc. (NASDAQ: CSCO), and over 1,300 others.
The platform connects those vendors with a network of more than 20 million corporate IT buyers, who sign up to research their prospective purchases.
That's where Big Data comes in.
Thanks to its advanced artificial intelligence, our pick is able to identify not just what IT services its subscribers are looking to buy, but also when they are ready to pull the trigger on the purchase.
As a result, vendors are able to market their solutions with pinpoint accuracy, lowering their marketing expenses and raising their sales at the same time.
Given that global IT spending is approaching $4 trillion a year - double the GDP of Canada - it's obvious this type of Big Data is in high demand.
And our pick is head and shoulders above its competition in the field.
To top it off, this stock has also been given a top score by our Money Morning Stock VQScore™ system.
That means there's no better time to buy than now...
This Firm's One-Two-Three Punch Puts It at the Forefront of a $3.8 Trillion Industry
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Since it was founded in 1999, TechTarget Inc. (NASDAQ: TTGT) has grown into one of the leading providers of IT research material on the web.
Prospective IT buyers can browse and search more than 140 websites in order to help with their purchase decisions. TechTarget keeps those sites updated with more than 75,000 pieces of content - such as articles, white papers, and podcasts - covering 10,000 different technology topics every year.
The company is entering a new phase of profitability right now thanks to its ability to track "purchase intent." Based on the behavior of buyers, TechTarget can deduce their timeline for making a purchase.
That's important because buying IT services typically means making large, infrequent purchases. A team of researchers may collect data over a long period of time, and the executive green light may take another six to 12 months after that.
Purchase intent data from TechTarget lets vendors know exactly what buyers are looking for and what stage of the buying process they're in.
In 2018, this data accounted for 33% of TechTarget's business, up from zero as recently as 2014. And the company is aiming to get it up to 50% in the near future.
With 650 employees, TechTarget has expanded to multiple locations beyond its Massachusetts headquarters. That includes an office in northern California, as you'd expect. It also has offices in Paris, Munich, and Singapore, giving it a presence in three of the six most innovative economies in the world according to the Bloomberg Innovation Index.
Another way TechTarget brings businesses together is through its expertise in Google search. It's the No. 1 provider of organic traffic among B2B technology companies, according to SEO firm SEMRush.
And it's not even close. The amount of organic traffic TechTarget drives to its clients is worth the equivalent of $40.2 million in Google ads every month. That beats the next best B2B Technology firm by 187%.
Between its research platform, its artificial intelligence, and its search engine dominance, TechTarget has its hand in every step of the IT buying process. When you consider that the typical customer makes it 70% of the way through that process before engaging with a sales rep, you can see why hundreds of vendors consider TechTarget's services a must-have.
On top of that, many research firms are forecasting three to five years of healthy growth in IT spending, which Gartner projects to total $3.8 trillion in 2019.
That makes TechTarget a must-have stock for your portfolio.
Now Is the Time to Buy TTGT
TechTarget's stock fell sharply after an earnings miss in November. The share price dropped by almost 50% between early November and late December.
This was a classic overreaction.
But since Christmas Eve, TTGT is up 45% to about $16.50, as the market has realized the value it left on the table. The fundamentals suggest we can expect more growth from here.
In spite of one quarterly miss, the company beat earnings per share (EPS) for 2018 overall, and rose 55% from the year before. According to Factset, it is projected to grow EPS by another 59% by the end of 2020.
Since 2016, TechTarget has boosted sales by 14%, and its net income has multiplied more than five-fold in that time.
2018 marked the company's 15th straight year of positive free cash flow, and the third consecutive increase. Free cash flow has risen from $7.6 million in 2015 to $18.3 million in 2018. Net operating cash flow is also up in three consecutive years, more than doubling in that time.
No wonder a majority of analysts tracked by FactSet call TTGT a "Buy" or "Overweight." Eric Martinuzzi of Lake Street Capital Markets set a price target of $23 - nearly 40% above its current price.
But comparing its valuation metrics to its peers suggests an even bigger rise on the way. Its price/earnings ratio comes in at 65% of the industry average, and its price-to-sales is just 55% of average.
That means it could be worth up to 82% more than its current stock price.
Combine that with its growing market and unbeatable artificial intelligence, and TechTarget is a stock that can give deliver big returns for years to come.
And if you're looking for more ways to profit, we've got you covered...
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About the Author
Stephen Mack has been writing about economics and finance since 2011. He contributed material for the best-selling books Aftershock and The Aftershock Investor. He lives in Baltimore, Maryland.