The tech industry has spawned numerous stocks that have generated outsize growth. Tech is so influential that seven of the top 10 stocks, as measured by market cap, all come from this industry (and two of the others are tech adjacent).
Moreover, the industry continues to produce such companies with large- or possibly mega-cap potential, yet not all of them gain significant attention. Three tech stocks that may deserve more notice are Latch (NASDAQ: LTCH), MongoDB (NASDAQ: MDB), and SoFi Technologies (NASDAQ: SOFI).
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1. Latch
Latch is working to bring some features from smart homes to apartments and commercial buildings. Its Latch OS links to devices such as door locks, cameras, and thermostats. This allows building managers to operate a building more efficiently, reducing the number of necessary personnel. Also, the Latch OS is available through a subscription service, bringing recurring revenue to the company.
Latch has managed to get its equipment into more than 3-in-10 new apartment buildings and has landed key clients such as the Empire State Building. However, the stock has suffered as supply chain issues have delayed construction projects, slowing the pace of getting its OS into operational buildings.
Nonetheless, Latch generated $41 million in revenue in 2021, 129% more than last year. It also reported $360 million in total bookings, the value of signed contracts for equipment in software within new builds expected within two years. Though bookings are not a revenue guarantee, they serve as an indicator of future growth. Latch also forecasts 2022 revenue in the $75 million to $100 million range, a 111% increase at the midpoint.
Admittedly, Latch's stock price has fallen by more than two-thirds since TS Innovations launched the stock via a special purpose acquisition company in June. However, as more bookings turn into revenue, Latch stock could rise as the company increases the efficiency of building operations.
2. MongoDB
MongoDB appears poised to disrupt a software segment ripe for change -- databases. It stands out as a non-relational database, designed to handle unstructured data.
This differs from the relational databases popularized by companies such as Oracle. Instead of data that fits neatly into rows and columns, MongoDB can store data such as videos or text messages less prevalent in past decades.
MongoDB has attracted competition from Amazon and its DynamoDB. Since Amazon's AWS is the No. 1 cloud provider, this places MongoDB at a disadvantage with AWS's clients. Nonetheless, the fact that DynamoDB only works in AWS's ecosystem may negate that disadvantage.
MongoDB also posted solid results for fiscal 2022, reporting revenue of $874 million for the year. This rose 48% from year-ago levels. The company expects revenue growth to slow but remain robust as it forecasts revenue of $1.15 billion to $1.18 billion in fiscal 2023, a 33% increase at the midpoint.
The stock has risen 5% for the year, and it is currently priced about 45% below its 52-week high. This has taken its P/S ratio to 27, down from a high of 47 in November. Despite the high sales multiple, the discounted stock price could make MongoDB attractive considering the company's disruptive influence on the database market.
3. SoFi
Investors may better know SoFi from its sponsorship of SoFi Stadium, where the NFL hosted the Super Bowl in February. However, the company has emerged from a June 2021 initial public offering to play a prominent role in the fintech industry.
SoFi provides personal financial services such as loans, brokerage, and insurance on a digital platform. It stands out further by serving as both a fintech and a traditional bank, providing checking and savings accounts on top of other financial products.
Through these services, it generated $985 million in 2021, climbing 74% year over year. For fiscal 2022, the company guided for revenue of $1.57 billion, which would mean a 55% increase if that forecast holds.
Still, the stock has dropped by more than 55% from its IPO price amid a sell-off last summer. Also, the P/S ratio of 7 is slightly lower than that of Block, its fintech and traditional finance counterpart on the business side, when calculating against Block's non-Bitcoin revenue for 2021. Due to its ability to handle an individual's banking, financial, and fintech needs in one ecosystem, investors may want to buy this cheap stock before everyone else does.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Will Healy owns Block, Inc. and Latch, Inc. The Motley Fool owns and recommends Amazon, Bitcoin, Block, Inc., Latch, Inc., and MongoDB. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
