A new small cap stock in my portfolio

 Today I added a new small-cap stock to my portfolio, which has tremendous potential to grow in the next 2 years. The company name is Onto Innovation $ONTO. The company engages in the design, development, manufacture, and support of process control tools that perform macro-defect inspection and metrology in the US and internationally.

Why I added this:

• Semiconductor equipment exposure tied to AI and advanced packaging.
• Strong free cash flow generation.
• Healthy balance sheet.
• Low debt
• Attractive profitability versus many growth peers.

Long-term growth drivers:

• AI
• High-bandwidth memory
• chiplet architecture
• Advanced semiconductor packaging
• Electric packaging
• Data centers
• 5G infrastructure

Average Analyst target is $369.6, which has 40% upside from its current price.

Expected revenue to grow 21.66% and the EPS to grow 38.22% in the next year.

Revenue forecast:

EPS forecast:

Source: Stockanalysis

I am accumulating a new small cap stock

 I have started to invest in a small-cap growth company, Xometry ($XMTR). The approximate market cap is $5.6B. The company operates an artificial intelligence (AI) powered online manufacturing marketplace in the United States and abroad. Its marketplace uses AI to assist buyers in sourcing custom-manufactured parts and assemblies. It then obtains pricing and lead times. 

Reasons to buy:

• Revenue continues to grow at a high rate, about 29% trailing 12 months.
• Analysts expect Q2 revenue to increase about 32% YOY and EPS to grow about 62%.
• The company has transitioned toward profitability after years of investing for growth.
• Its AI-powered manufacturing marketplace benefits from network effects between buyers and suppliers, creating a competitive advantage.
• The recently announced partnership with Siemens expands enterprise distribution and customer acquisition opportunities.

Buying Plan:

• I have started to buy from $99.
• My preferred accumulation range is when it pulls back towards the 50-day moving average on lighter trading volume.

Key catalysts:

• Q2 earnings report is on August 4.
• Continued enterprise customer wins.
• Additional AI platform adoption.
• Further operating margin expansion.
• Recently Ygal from Wedbush initiated a buy rating of $126.
• Forecast: revenue growth of 27.64% and EPS growth of 91.08%.

Revenue forecast:

EPS forecast:

Source: Stockanalysis.