I was born, raised and educated within the environs of Boston, allowing me to witness first-hand the explosive decades-long growth of Route 128. The area’s famed state highway is home to scores of technology companies ranging in size from entrepreneurial start-ups to mega-cap titans.

The broader market faces risks in the year ahead, as inflation gains traction and the pandemic evolves in unpredictable ways. But one stock combines small-cap firepower with the momentum of technology demand: Progress Software (NSDQ: PRGS), located in Bedford, Massachusetts.

Progress is headquartered within the Route 128 technology corridor, the Silicon Valley of the East and locus of world-class academic centers such as MIT, Harvard, Yale, Brown, Tufts, and Amherst. Proximity to military contractors and their war chests of Pentagon funding is another catalyst for the region’s growth. The Route 128 technology community is the second biggest in the U.S. in terms of venture funds committed, behind only Silicon Valley.

The technology sector will continue to enjoy several tailwinds next year, as cash-rich corporations make deferred information technology (IT) capital improvements, and consumers and businesses clamor for tools that foster collaboration.

However, not all tech stocks are created equal. Some are one-product wonders, capitalizing on new and fickle consumer fads. Others are falling behind as rivals come up with better mousetraps.

High-flying tech stocks have a nasty habit of crashing and burning when their products encounter serious competition from disruptive improvements.

You can profit from technology’s growth, as well as the small-cap resurgence expected in 2022, with shares in sure-footed Progress Software. This stock rarely gets covered by the financial press, but PRGS is a chance for you to reap small-cap outperformance without the undue risk of thinly capitalized tech newcomers.

Progress is a global supplier of collaborative applications, and enabling technologies for the Internet of Things. The company’s products are used at over 60,000 organizations in 140 countries including 90% of the Fortune 500.

With a market cap of $2.2 billion, Progress is small enough to offer the potential for market-beating growth that’s tough to achieve for mega-cap rivals. But the company is large enough to remain stable when conditions get choppy.

A VPN alternative…

As workers get increasingly accustomed to working at home, the use of remote conferencing capabilities and cloud-based collaboration are increasingly familiar activities. The following chart shows the growth opportunities:

Software stocks such as Progress are a good bet for the post-COVID world. The coronavirus pandemic has generated a surge in virtual private network (VPN) usage, but VPNs can be unwieldy for end users. Among its notable products, Progress offers a proprietary alternative to VPNs, for remote workers to access on-premises data.

Called Hybrid Data Pipeline, it’s a lightweight data gateway that can securely access data in the cloud or behind the firewall without complex network/firewall configurations.

Progress reported third-quarter fiscal 2021 earnings per share (EPS) of $1.18, beating the consensus estimate by 42.2%, for a year-over-gain of 51.3%. Q3 revenues of $152.6 million surpassed the consensus expectation by 16.9%, for a year-over-year gain of 37.6%.

The company sports a healthy profit margin of 15.8% (most recent quarter). The stock currently trades at a forward price-to-earnings ratio of 12.8, compared to 21.3 for the S&P 500 and 27 for the information technology sector. Analysts expect the company to rack up year-over-year earnings growth for full-year 2021 of 19.7%.

Every portfolio should have exposure to the tech sector as well as small caps; Progress fits the bill on both counts.

Editor’s Note: I expect the bull market to continue into 2022, but with bumps along the way. Are you looking to profit from the current wave of bullishness, with less risk? That’s where my colleague Jim Fink comes in.

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John Persinos is the editorial director of Investing Daily. To subscribe to John’s video channel, follow this link.