In last month’s inaugural issue of Breakthrough Tech Profits, we focused on large-cap tech stocks to introduce you to the traditional ways we identify great investments. Less than a month later, all three of the stocks we recommended in that issue have gained ground, while the Standard & Poor’s 500-stock index has taken a nosedive.   

In this month’s issue we’ve picked some companies that are not as well known, and for that reason they offer more potential.

Next Gen Video

One such company is ­Ambarella, which our analyst Joe Duarte believes has become oversold and should rebound strongly soon. The entire semiconductor sector has taken a beating recently as PC sales continue to deteriorate, but in the case of this video chip maker, several events led to its downfall. Some of the best returns occur shortly after a stock reverses direction, and we think the timing is right to jump on this company.

Another way to capture big gains is to spot a trend just as it is about to soar, such as the demand for artificial intelligence to sort through the explo­sive growth in data. Ben Shepherd examines the trend in this issue. While some of the eventual winners like IBM are hiding in plain sight, others, such as Xilinx, are not so obvious. The problem with this sector is that the small companies worth owning are quickly swallowed up by giants such as Alphabet or Apple. We’re keeping an eye peeled for buying opportunities in the future.

Ripe Targets

Of course, a quick way to rack up profits is to buy a company shortly before it’s bought at a huge premium. With most large-cap tech stocks sitting on enormous piles of cash, buyout prices for smaller companies are rising quickly. The tech sector is in a strong consolidation phase fueled by the paranoia that any business that doesn’t evolve will soon become extinct. In some cases that means big companies buying smaller ones with needed technology, such as the two that my innogration model suggests are now ripe for a takeover.