2 secret tech growth stocks to watch this year and beyond

Wandisco(LSE: WAND) is one of only a handful of companies listed in London that are seeking to capitalise on the 21st century's data gold rush.

The storage, interpretation and sale of data is big business, and the market is growing every day. Estimates vary, but according to the International Institute for Analytics, the market for data analytics is currently believed to be worth more than $200bn.

In trying to grab share, Wandisco is holding its own against the sector's biggest players. Today the company announced that it has achieved Co-Sell status through the Microsoft One Commercial Partner Program. What this means is that the firm's product, the WANdisco Fusion Live Data Platform, can now be sold as a packaged offering with Microsoft Azure, the tech giant's enterprise-grade cloud computing platform.

Azure has been designed as cloud computing platform for big businesses to work with, and Wandisco's Live Data platform, which enables companies to put all their data to work together at any scale, looks to be a great addition to the offering.

I believe that this is something of a landmark deal for Wandisco. Receiving Microsoft's stamp of approval shows that the firm's offering is the real deal and opens up a tremendous market opportunity. Earlier this month the company also announced a partnership with Alibaba Cloud solutions, opening up the Chinese market as well.

Growth is exploding

Even though Wandisco is a fraction of the size of these companies, the partnerships (with two of the most prominent data names in the world) tell me that the demand for its services is high, which is already showing through in results.

Bookings for fiscal 2017 grew 45% year-on-year to $22.5m, and adjusted pre-tax losses narrowed to $10m from $18.2m. And while City analysts are not expecting the firm to report a net profit for the next two years, on a cash flow basis, the company is making progress. Cash burn fell to $5.3m for the year to the end of December, and the group had $27.4m of cash in the bank at the end of 2017, implying that it has headroom of at least five years (at the current rate of cash burn) to become profitable. The sky really is the limit for Wandisco.

Too cheap for the growth

LoopUp(LSE: LOOP) is not a data business in the same way as Wandisco, but it is active in the same business-focused tech market.

The firm offers customers a high-tech video conferencing solution, that's designed to get rid of all the usual annoying problems that come with video conferencing such as background noise.

Demand for the firm's services is exploding with revenue growing 36% for 2017 and earnings per share rising 722% to 4.4p thanks to economies of scale. City analysts are expecting earnings per share growth of 34% for 2018 and 115% for 2019, meaning that the shares are currently trading at a 2019 P/E of 27.3. This low multiple, in my view, looks too cheap for a tech company growing earnings at a compound annual growth rate of 69% per annum (based on City forecasts for the next two years).

What's more, LoopUp is generating cash, so as the business grows, I wouldn't rule out the introduction of a dividend.

The best small-cap around?

So overall, if you are looking for two fast-growing tech stocks that have enormous potential over the next five or even 10 years, then I don't think you can go wrong with LoopUp and Wandisco.

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Rupert Hargreaves owns no share mentioned. Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool's board of directors. LinkedIn is owned by Microsoft. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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