Mega-cap stocks are exhausted after a monumental run thus far in 2023. The case becomes even more evident when specifically analyzing the technology sector. In fact, just seven companies make up over 50% of the Nasdaq 100 Index, according to Genuine Impact. The “magnificent seven” is comprised of household names that are most likely familiar to anyone and everyone who considers themselves a market enthusiast: Microsoft (NASDAQ: MSFT), Apple (NASDAQ: AAPL), Alphabet (NASDAQ: GOOG), Amazon (NASDAQ: AMZN), NVIDIA (NASDAQ: NVDA), Meta Platforms (NASDAQ: FB) and Tesla (NASDAQ: TSLA). While these bullish darlings continue to impress, some analysts are suggesting it may be time to consider other opportunities.
Time to Research Other Opportunities?
These mega-cap darlings are not just impacting the Nasdaq either. The top three on the list, Apple, Microsoft and Google, are also the three largest components of the S&P 500 with a combined market cap of over $6.9 trillion. To put that astronomical figure into perspective, $6.9 trillion is a larger market cap than every national stock market in the world excluding the United States.
While these mega-caps have provided solid performance thus far in 2023, they appear to have gotten quite overvalued and top-heavy. This has renewed some interest in looking for other opportunities around the market.
BMO Chief Investment Strategist Brian Belski recently shared this opinion: “There is no denying the sharp outperformance of mega-caps in 2023 with the five largest stocks by market cap eclipsing the S&P 500 by 30 percentage points YTD and on pace to outperform for the fifth straight month. That being said, however, our work shows that once relative performance of these mega-caps has subsided or winning streaks have ended, the broader market has historically held up just fine with gains being more common than losses.”
One such stock that could benefit from a renewed focus outside of the major mega-caps is Asure Software (NASDAQ: ASUR).
Growth Engine Still Revving For Asure
The Austin, Texas-based human capital management (HCM) service provider saw a meteoric outperformance compared to the overall market between September 2022 and early April 2023. The company’s robust growth reported during Q4 2022, FY 2022 and Q1 2023 gave investors a lot to be excited about.
Despite a healthy correction after more than doubling in a little over six months, the underlying growth story is likely no different than it was earlier this year. Asure continues to be in an impressive position operationally and the investment community may be in for a strong reminder of this growth once Q2 2023 results are reported in the coming months.
Analysts Maintain Strong Outlook for Asure; Estimate 40%+ Upside
Wall Street analysts continue to hold their same bullish outlook on Asure, which has not waivered during the pullback. All seven analysts still hold a consensus “strong buy” on shares of ASUR with the average price target at $19.83, implying potential upside of 43.44% from current prices over the next twelve months.
On an individual basis, here are each analyst’s specific rating and price target for the stock:
- Richard Baldry of Roth MKM maintains a “buy” rating with the most bullish price target of $25.00
- Vince Collicio of Barrington reiterated his “buy” rating with a $17.00 price target
- Jeff Van Rhee of Craig-Hallum continues to maintain a “buy” rating and has a $18.00 price target
- Joshua Reilly of Needham reiterated a “buy” rating with a $20.00 target
- Eric Martinuzzi of Lake Street assigned shares with a “buy” rating and a $19.00 target
- Bryan Bergin of TD Cowen reiterated a “buy” with a $19.00 price target
- An analyst from Northland Securities initiated the stock with a “buy” and a $19.00 target
In conclusion, the dominance of mega-cap stocks, particularly in the tech sector, has shown signs of exhaustion in 2023, sparking interest in potentially underexplored opportunities within the market. Asure Software (NASDAQ: ASUR), a small-cap tech stock, appears to present an enticing opportunity for diversification amid this shift. Asure, with its robust operational performance and impressive past growth, is a viable contender for investors’ attention.
Despite a healthy correction in its share price, the company’s underlying growth narrative remains compelling. Furthermore, Wall Street analysts unanimously maintain a bullish stance on Asure, predicting a 71.10% upside potential over the next twelve months. As such, Asure stands as an attractive alternative for investors looking to mitigate their exposure to overvalued mega-cap stocks while simultaneously tapping into potential high-growth opportunities in the tech sector.
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