“The future is already here,” science fiction writer William Gibson famously said. “It’s just not evenly distributed.” While that statement is in some sense obvious — global inequality makes it so — it’s also of profound importance to investors looking for high-growth stocks.

#-ad_banner-#Information technology transformed every area of human life in the 20th century. The rate of change accelerated with the personal computer in the 1980s, shifted into overdrive when Internet access became ubiquitous in the 1990s and exploded with the proliferation of mobile Internet in the 2000s. We’re now experiencing the domino effect of these enormous technological changes as tens of thousands of innovators around the world expand on these technologies and popular platforms to create products, services and new technologies.

An investor’s challenge is to see the future that’s already here — in a publicly traded company’s technology — and connect the dots to a few years from now, when the company is distributing that technology to a much wider market. The further challenge is determining when a stock is trading at a valuation that underestimates the revenue and cash flows generated by that future distribution.

To that end, consider two up-and-coming tech stocks that I think own a piece of the future:

The aptly named Benefitfocus (Nasdaq: BNFT) has taken a specific but widespread task — managing employee-benefit programs — and built a better mousetrap to execute it.

Founded in 2000, Benefitfocus has become one of the leading providers of cloud-based, mobile-enabled benefits software solutions — a one-stop shop that allows employers and employees to log in to enroll, manage and exchange information about all the benefits they employer offers (such as medical, dental and other voluntary benefits like wellness programs). Its interfaces are user-friendly for employees, while providing simple administration and analytics for employers. The company has a rapidly growing customer base currently at more than 720 large employers, including McDonald’s, Under Armour and Dannon, and it works with more than 50 insurance carriers. More than 25 million consumers have used its platform.

Benefitfocus’ sales rose 31% in 2014 and 35% in 2015, and the overall market opportunity implies fast growth can continue for several years. Benefits account for more than 30% of overall employee compensation in the United States, and the ability to provide employees a one-stop mobile app to manage all their benefits is becoming a must-have for large employers. Yet Benefitfocus so far serves only 1% of the total large-employer market. Insurance carriers are another customer market, as they increasingly want to offer a cloud-based service along with their products. And in addition to direct sales to customers, Benefitfocus’ products are distributed through powerful partners with strong large-employer relationships, including Mercer and SAP.

Benefitfocus is not yet profitable, but with revenue growing rapidly and gross margins improving, the company looks to be profitable within the next two to three years, with rapid earnings growth thereafter. At recent prices, the stock trades more than 25% below its 52-week high.

Mitek Systems (Nasdaq: MITK) is a global leader in a fast-growing, essential market: identity verification for mobile transactions — making credit-card payments, opening an account, getting an insurance quote, and the like. More than 4,500 organizations’ apps use Mitek technology, and they serve tens of millions of consumers a day. The fastest-growing group of customers is millennials, who grew up in an online world and are extremely comfortable with so-called “online self-service” activities, such as depositing checks remotely, sending sensitive documents via smartphone or transmitting scans of driver’s licenses to verify identity.

Mitek’s systems are used primarily by financial-services providers, including banks and insurance companies, but the company is using its expertise (and patented technologies) in that market to grow vertically by attracting online retailers, pharmacies and other customers with online functions. Almost every company online is grappling to avoid the growing problem of online fraud: specifically, account takeover and new account fraud. Javelin Strategy & Research estimates that the amount of money involved in such fraud will rise from $5 billion in 2015 to $8 billion in 2018, because more transactions are moving online and fraud perpetrators are becoming ever more sophisticated. That creates a huge market opportunity for Mitek and its peers.

The company’s revenue is expected to grow at least 24% in fiscal 2016 (ends September), with solid operating margins and fast-rising earnings — about 25% annualized earnings growth over the next few years. Mitek has no debt and generates good cash flow. At recent prices, the stock trades at a PEG ratio (price/earnings ratio over growth rate) of 2.6, which is reasonable for a fast grower in a hot market.

Risks To Consider: High-growth technology stocks tend to trade at high valuations, which makes their shares vulnerable to significant selloffs if future earnings projections are decreased.
    
Action To Take: Buy Benefitfocus below $36 and Mitek Systems below $6.10.

P.S. Have you seen our list of The 10 Most Shockingly Profitable Predictions For 2016? Our previous predictions have given investors annual returns as high as 310%. And this year’s group might still be our biggest money-makers yet. To hear the full list of predictions, including how to profit from Google’s shocking new business venture, click here.