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Small-cap tech stocks can offer investors extremely high growth opportunities, but can also add massive levels of risk. One strategy for shrinking that risk is to seek out small caps tech stocks that won't stay so small for long—i.e. those that are projected to grow over the long term. Keeping this idea in mind, we focused on small tech companies that not only have strong growth projections, but that also appear undervalued according to their fundamentals. We arrived at a short list of tech companies that warrant more research and analysis.

EPS growth (earnings per share growth) illustrates the growth of earnings per share over time. The 5-Year Expected EPS Growth Rate is a long term annual growth estimate, where the growth projections are made by analysts, the company or other credible sources.

The Price/Book Value Ratio is a great price-multiple valuation metric to find companies that could be potentially undervalued or overvalued. If a company has a Price/Book Value Ratio of less than 1 it is stated to be trading below "break up" value. A lower P/BV Ratio can indicate a potentially mispriced company or indicate that something is fundamentally wrong with it.

The Price/Sales ratio is a price-multiple valuation metric used to help identify if a company is cheap by its 12-month trailing sales numbers. In the most basic terms, it lets an investor know how much the investment community is willing to pay for every dollars worth of sales. A company with a P/S ratio of one or lower would be viewed as cheap because investors are paying $1 or less for every dollars worth of a company's sales. On the other hand, a company is generally considered to be expensive when the P/S ratio is above three. These are general guidelines used by the investment community not hard rules to be clear. Price/Sales Ratio = Current Stock Price/Revenue (sales) per Share

We first looked for small cap technology stocks. We then looked for businesses that have high future earnings per share growth forecasts (5-year projected EPS Growth Rate>25%). We then looked for companies that are undervalued (P/BV<1)(P/S<1).

Do you think these small-cap stocks are worth more than the market currently says? Use our screened list as a starting point for your own analysis.

1) Internet Initiative Japan, Inc. (NASDAQ:IIJI)

Sector:Technology
Industry:Internet Service Providers
Market Cap:$922.58M
Beta:1.19

Internet Initiative Japan, Inc. has a 5-Year Projected Earnings Per Share Growth Rate of 31.10%, a Price/Book Value Ratio of 0.00, and a Price/Sales Ratio of 0.75. The short interest was 0.08% as of July 15, 2012. Internet Initiative Japan, Inc., together with its subsidiaries, provides Internet connectivity, WAN, outsourcing, and systems integration services to customers primarily in Japan.

Its Internet connectivity services include services for corporate use, such as IP services and data center connectivity services, broadband Internet connectivity services, dial-up access services, IIJ mobile services, and IIJ ISDN/F and IIJ line management/F services; and connectivity services for home use consisting of IIJ4U, IIJmio, and hi-ho.

The company's outsourcing services comprise security-related outsourcing services that protect customer network systems from unauthorized access and secure remote connections to internal networks; network-related outsourcing services, such as Internet-virtual private network, and router rental; server-related outsourcing services, including Web hosting, e-mail hosting, document storage, and streaming; data center-related outsourcing services consisting of data center facility, and management and monitoring; and customer support and help desk solutions, and IP phone services.

2) Suntech Power Holdings Co., Ltd. (NYSE:STP)

Sector:Technology
Industry:Diversified Electronics
Market Cap:$320.65M
Beta:3.21

Suntech Power Holdings Co., Ltd. has a 5-Year Projected Earnings Per Share Growth Rate of 36.18%, a Price/Book Value Ratio of 0.40, and a Price/Sales Ratio of 0.12. The short interest was 13.67% as of July 15, 2012. Suntech Power Holdings Co., Ltd., a solar energy company, engages in the design, development, manufacture, and marketing of photovoltaic (PV) products.

It offers monocrystalline and multicrystalline silicon PV cells; PV modules ranging from 20 to 300 watts in power; silicon ingots/polysilicon wafers; and building-integrated photovoltaic products. The company also provides PV system integration services, including the design, installation, commissioning, and testing of PV systems; and project development services.

3) Kimball International, Inc. (NASDAQ:KBALB)

Sector:Technology
Industry:Printed Circuit Boards
Market Cap:$330.11M
Beta:1.37

Kimball International, Inc. has a 5-Year Projected Earnings Per Share Growth Rate of 27.70%, a Price/Book Value Ratio of 0.86, and a Price/Sales Ratio of 0.29. The short interest was 3.41% as of July 15, 2012. Kimball International, Inc. manufactures and sells electronic assemblies and furniture in the United States, Poland, the United Kingdom, and internationally. The company operates in two segments, Electronic Manufacturing Services (EMS) and Furniture. The EMS segment produces electronic assemblies, circuit boards, and wiring harnesses for electronic organs and keyboards.

*Company profiles were sourced from Finviz. Financial data was sourced from Finviz and Google Finance.

Source: 3 Small Cap Tech Stocks Growing Fast Despite Their Low Prices