A half-dozen smaller, under-the radar tech stocks have risen by as much as 150% this year, leaving the popular big tech group -- the FANGs -- behind. This has led some strategists to recommend that investors shift away from big tech companies and, instead, buy up these young tech stocks.

Companies that are leading the market and are positioned to keep outperforming include Cabot Microelectronics Corp. (CCMP), SolarEdge Technologies Inc. (SEDG), Viavi Solutions (VIAV), Brooks Automation Inc. (BRKS), Power Integrations Inc. (POWI), and Itron Inc. (ITRI).

 "Today, when it comes to technology stocks, while big may be beautiful, small may be smart," said Jim Paulsen, chief investment strategist at The Leuthold Group, as outlined in a recent Business Insider report. Paulson calls these small techs the 'Mini-FANGS,' which are displacing the traditional FANGs -- Amazon.com Inc. (AMZN), Netflix Inc. (NFLX), Facebook Inc. (FB) and Alphabet Inc. (GOOGL) -- as market leaders.

Valuation, Volatility, Performance

SolarEdge stock has risen 153% this year, for example. Itron is higher by 57%, Brooks Automation and Cabot Microelectronics are both up 45%, while Viavi Solution’s has jumped 43%. By comparison, the S&P 500 has returned about 18.4% in 2019. 

Paulsen likes these small cap names from a valuation, volatility and performance position, per BI. The money manager adds that smaller names are less vulnerable to regulation.

What’s Next

There's a compelling reason why these stocks will continue to do well. Small cap stocks in general, which include the mini-FANGs, are more compelling from a valuation perspective, according to the money manager. He indicates that based on forward price-to-earnings multiple, price-to-book ratio, and price-to-cash multiples, smaller stocks have become less expensive since the end of 2013.