3 Forgotten Tech Stocks That Aren’t Dead Yet

The tech world moves at a breakneck pace, which inevitably leaves dozens of formerly successful companies on the outside looking in as forgotten relics of the past. Of those, some were one-hit wonders which brought an innovative product to market and enjoyed tremendous short-term success which they were unable to sustain.

However, other companies learned from their successes and failures alike and were able to adapt and survive, sometimes by branching into entirely different market segments. It’s often a long and difficult road back to relevance for such companies, but for the investors who ride it out, the rewards can be huge.

In this article, we’ll look at three such small-cap tech stocks that have largely been dismissed and forgotten by the investment world, but which may not be dead just yet. All of these stocks also happen to be popular among the billionaire hedge fund managers tracked by Insider Monkey.

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BlackBerry Ltd (NASDAQ:BB)

Why BlackBerry Ltd (NASDAQ:BB) Was Forgotten: BlackBerry, formerly Research in Motion, was one of the early smartphone pioneers as well as its biggest star at one point, with a sizable share of the global smartphone market between 2008-2010 of between 15-20%. By the end of 2013 that market share had collapsed to less than 1% due to intense competition from the likes of Apple Inc. (NASDAQ:AAPL) and Samsung. Today, it’s statistically 0%, though not quite nil. Regardless, with its smartphone presence having been almost entirely wiped out, so too has awareness of the company among the average investor.

Why You Shouldn’t Forget About BlackBerry Ltd (NASDAQ:BB) Just Yet: BlackBerry is not going to make a smartphone comeback, although that would make for an awesome turnaround. Instead, the Canadian company has pivoted towards mobile security and self-driving car technology, and while these domains aren’t nearly as sexy as selling 100 million smartphones a year, there is money to be made in them.

BlackBerry’s QNX software is now embedded in more than 120 million vehicles, a greater than 100% increase over the last three years. Gross margins for BlackBerry’s technology solutions segment were a robust 76.5% in the company’s fiscal 2019 first-quarter, while software and services revenue rose by 18% year-over-year. Furthermore, BlackBerry has a cash stockpile of over $2 billion, which CEO John Chen is planning to use this year on M&A. That could further accelerate BlackBerry’s growth and competitiveness in various EoT verticals, including health care, which also experienced strong fiscal Q1 growth.

BlackBerry was owned by six of the billionaires tracked by Insider Monkey as of the end of 2017, including Ken Griffin’s Citadel Investment Group and Jim Simons’ Renaissance Technologies.

On the next page we’ll look at two other forgotten tech stocks that still have a little life left in them.

Ciena Corporation (NYSE:CIEN)

Why Ciena Corporation (NYSE:CIEN) Was Forgotten: Fiber optics was all the rage once upon a time, when the internet was in its early days and the sky was the limit in terms of how fast it could grow, how big it could become, and how all that traffic would get routed around. That was clearly evidenced by Ciena’s monolithic valuation at the height of the dot-com bubble in 2000, when shares traded at over $850 when adjusted for today’s share price (which is a meager $26). However, yesterday’s hot industry eventually becomes today’s old news, and that’s the case with network stocks, which have little of the cachet they once did, despite the fact that the internet DID grow to become as big as anyone could’ve imagined.

Why You Shouldn’t Forget About Ciena Corporation (NYSE:CIEN) Just Yet: Ciena shares haven’t done much of anything over the past decade, but that could change this year. Shares have already jumped by 21% in 2018 and further gains could be in store. Ciena’s WaveLogic Ai is making global waves and could propel the company to as much as $2 in EPS by 2019 according to Morgan Stanley. And while Ciena’s U.S revenue has fallen recently, international revenue has been much stronger, being driven by key markets like China and India. Quant billionaires also love Ciena Corporation (NYSE:CIEN), with several of them buying the stock during the fourth-quarter of 2017.

Zynga Inc (NASDAQ:ZNGA)

Why Zynga Inc (NASDAQ:ZNGA) Was Forgotten: Zynga briefly traded at nearly $15 shortly after its IPO in late-2011, when the Farmville-maker was all the rage and social gaming seemed poised to sweep over the world. If you were on Facebook Inc (NASDAQ:FB) around at that time, you surely remember being inundated with posts to water friends’ crops or help them take down some two-bit gangster in Mafia Wars.

Before the end of 2012 shares had declined to barely above $2, and that was BEFORE the company’s monthly active users took a massive hit in 2013, falling from over 250 million at the start of the year to half of that within just eight months. As it turned out, social gaming wasn’t all the rage for long, partly due to Facebook Inc (NASDAQ:FB) cracking down on all those game requests, which pushed the free-to-play gaming scene to mobile devices, where Zynga’s old formula didn’t work nearly as well.

Why You Shouldn’t Forget About Zynga Inc (NASDAQ:ZNGA) Just Yet: Zynga shares have jumped by 17% since April 23 thanks to surprisingly solid first-quarter results that showed an increase in mobile users and revenue. Then at the end of May, Zynga acquired Gram Games for $250 million, a deal that was praised by investors and should help Zynga meaningfully grow EBITDA in coming quarters.

Zynga’s adjusted EBITDA had already surged to 17.2% from just 6% a couple years earlier, so the company is clearly on the right track. Zynga is now fully invested in mobile gaming, which remains a very strong segment of the industry, and the company is in a better position financially than it’s been in years. Zynga was a favorite penny stock among billionaires at the end of 2017.

Disclosure: None