These six high-tech stocks are too cheap to ignore. Growth rates, low price-earnings ratios and high yields make them both attractive value and growth stocks.
Additionally, each of these tech stocks pays a solid dividend, has positive excess free cash flow (FCF), and most of them have stock buyback programs. The latter helps to increase earnings per share (EPS) and dividend per share (DPS), as well as driving stocks higher.
Given the recent decline in stocks, now is the time to start averaging these stocks. Indeed, their valuations are currently reflecting a good deal of the bad news and fears of a recession appear to be “in” share prices.
Let’s dive in and look at these top tech stocks.
Tech Stocks: Micron Technology (MU)
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Market cap: $61 billion
Micron Technology Inc (NASDAQ:MU) is a maker of memory and storage semiconductor chips expected to deliver 31% earnings growth through August 2023. For example, analysts expect earnings per share (EPS ) will drop from $9.58 per share this year to $12.56 next year.
At a price of $55.01 at the June 16 close, that puts its P/E multiple for 2023 at just 4.4x. This makes it one of the cheapest high-tech stocks.
Additionally, with its huge free cash flow, MU stock is able to pay a dividend of 40 cents per share. Its EPS of $9.58 this year will have no problem covering that dividend, given that the stock has a dividend yield of 0.7%. In fact, the company probably has the option of increasing the dividend.
So far, Micron likes to use its excess free cash flow to buy back stock given its strong stock buyback program. It repurchased $408 million in its most recent quarter ending March 3, which equates to about 2.5% of its market capitalization on an annualized basis.
So, with its cheap valuation and growing earnings, its buyback program will act as a catalyst to help drive the stock higher. No wonder the average price target of 18 analysts polled by TipRanks.com is $109 per share, double the current stock price.
Chegg, Inc (CHGG)
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Chegg (NYSE:CHGG) is an educational software direct-to-student learning platform expected to grow 14% in 2023. For example, the average of 12 analysts surveyed by Seeking Alpha is that Chegg will produce an EPS of 1. $22 in 2023.
That puts CHGG stock, Thursday’s closing price of $17.02 at 13.9 times earnings. That’s well below its all-time average of 47.5x over the past five years, according to Morningstar.com. In fact, even at 50% of this average, CHGG is expected to trade at 23.75x, or 72% above today’s valuation metric.
Additionally, the company announced on June 2 that it was doubling its buyback program from $1 billion to $2 billion. It only had $65 million left from its previous $1 billion program, so in effect it was renewing the $1 billion program. In fact, in the first quarter, the company spent $300 million on its accelerated share buyback, which was completed in April.
The company has numerous FCFs to finance its takeovers. In the first quarter, FCF was $50.5 million, representing 25% of its sales. That’s a very high FCF margin, and it’s the basis of the company’s confidence in reviving its billion-dollar buyback program.
As if that wasn’t enough to catalyze CHGG stock, management bought stock. Insiders, including the CEO, CFO and a director, were buying CHGG shares late last year, based on information from Openinsider.com.
Look for CHGG stock as one of the best performing high-tech stocks over the next year.
Microsoft (MSFT)
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Microsoft Inc (NASDAQ:MSFT) is being hit hard along with other large-cap tech stocks. As of the June 16 close at $244.97, MSFT stock is down 27.3% year-to-date from $336.82, where it ended in 2021. , it is down 28.6% from its high of $343.11 on November 19, 2021.
This is the deflation of its forward multiple. The company does not lose money. Its earnings are expected to rise 15.5% this year (ending June 30, 2022) to $9.30 per share. This represents an increase from $8.05 in 2021. Additionally, next year’s EPS (ending June 30, 2023) is expected to rise another 15.5% to $10.74. That’s according to the average of 42 analysts surveyed by Refinitiv (Yahoo! Finance).
So, at today’s price, that puts MSFT stock on an inexpensive P/E multiple of just 22.8 times earnings. That’s significantly lower than its historical five-year average of 27.96x, according to Morningstar.
Additionally, Microsoft’s buyback and dividend program grew 25% in its most recent quarter, and the company spent $12.4 billion on dividends and stock buybacks. At this rate, it could spend $50 billion a year, or 2.76% of its market cap, on return of capital. This will act as an important catalyst helping push MSFT higher over the next year.
Alphabet (GOOG, GOOGL)
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Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) is too cheap now, with its stock at $2,120.67 at the June 16 close. With earnings growth of 18.8% expected next year, and at a multiple of 16x, it is well below its historical average.
For example, Morningstar reports that the five-year historical average P/E multiple was 26.4x. The multiple of the action has therefore fallen considerably.
Additionally, Alphabet will conduct a 20-for-1 stock split, effective July 15. Although this means nothing from a financial and mathematical point of view, it could cause the price to rise.
For example, at the current price of $2,120.67 for GOOG stock, the new price will be 1/20th of that or $106.03 per share.
This means that small investors can more easily buy the shares. US investors like to own whole stocks, in part because dividend payouts are generally fairly stable per share.
In addition, it greatly facilitates the purchase of options. After the split, one contract (covering 100 shares) represents only $10,603 worth of shares. Now it will be easier, for example, to make a covered call play or a short sell play out of the money to earn income on GOOG stocks.
No wonder the average price target of nine analysts polled by TipRanks is $3,146 per share, 48% higher than today. This makes it one of the best and most undervalued tech stocks on this list.
Oracle (ORCL)
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Oracle Corp (NYSE:ORCL) is very cheap. Earnings for this cloud platform and software company are expected to rise 12.3% to $5.93 per share in 2023. That puts ORCL stock at $68.71 at the June 16 close. , on a cheap forward multiple of just 11.6 times earnings. That’s well below its average forward multiple of 15 times over the past five years, according to Morningstar.
Additionally, the company just reported results on June 13 for its fourth fiscal quarter ending May 31. Revenue grew 5%, most of which came from cloud services and support, which grew 19%. Its non-GAAP EPS was $4.90, also up nearly 5% year-over-year (+4.925% from $4.67 a year earlier).
So far, no drop in earnings for this high-tech company is on the horizon. Analysts are still very positive about its future earnings forecasts.
Oracle spent $674 million in its fourth fiscal quarter on stock buybacks, according to Seeking Alpha. This equates to an annualized rate of $2.7 billion or 1.48% of its $183 billion market valuation. Combined with its 1.8% dividend yield, that means shareholders get a total return of 3.24%.
At this rate, ORCL stock is too cheap to ignore. Analysts polled by TipRanks expect it to rise 29% to $88.71 over the next 12 months.
Avnet (AVT)
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Avnet (NASDAQ:AVT) is an electronics retailer that is expected to show nominal growth over the next year. Seeking Alpha shows nine analysts expect its EPS to nominally rise from $6.85 this year to $6.98 next year.
But at $41.89 per share as of June 16, the stock has a low multiple of 6x earnings for 2023. That’s very cheap, especially since the company is profitable.
Additionally, AVT stock has a dividend yield of 2.3% with plenty of free cash flow (FCF) to cover the dividend. For example, in the last quarter ending April 30, the company produced $232.2 million in FCF. That was more than enough to cover its dividend payout of $25.6 million as well as share buybacks of $43.4 million.
This makes Avnet one of the cheapest tech stocks on this list.
As of the date of publication, Mark Hake did not hold (either directly or indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to the InvestorPlace.com Publishing Guidelines.
What are the most overvalued stocks right now?
Here are seven stocks to sell before their outlook darkens even further:
- Interactive Platoon (NASDAQ:PTON)
- Teladoc Health (NYSE:TDOC)
- Block (NYSE: SQ)
- Nvidia (NASDAQ: NVDA)
- MicroStrategy (NASDAQ:MSTR)
- Royal Caribbean (NYSE: RCL)
- Boston Beer (NYSE: SAM)
What are the most overbought stocks? Exxon Mobil (XOM) is the most overbought stock with a 14-day Relative Strength Index (RSI) above 70 for 22 consecutive days.
What is the most overvalued stock today?
| Teleprinter | Last | Chg % |
|---|---|---|
| AACNBD | 35.13USD | −0.11% |
| AAINCHolding Company) D | 17.88USD | 5.38% |
| AMPY-D | 9.42USD | 3.40% |
| AR D | 44.96USD | −0.29% |
What company has an overvalued stock?
(NYSE:JPM), Verizon Communications Inc. (NYSE:VZ) and Bank of America Corporation (NYSE:BAC), analysts believe The Trade Desk, Inc. (NASDAQ:TTD) is an overvalued stock. Revenue grew from $477 million in 2018 to approximately $1.1 billion for 2021, representing 2.4x growth over the past 3 years or 33% annually.
Which sector will boom in next 10 years?
Over the next 10 years, the infrastructure sector in India will have to continue its growth momentum and is expected to maintain a growth rate of between 7 and 10%, a very healthy sign.
Which sector will explode in the future? Pharma or Indian Pharmaceutical Sector (IPS) The pharmaceutical sector is related to the healthcare sector, as the healthcare sector is expected to grow in 2022, the pharmaceutical sector is also expecting a promising year.
Which sectors will do well in 2022?
| Sector | Estimated EPS – 2022 | Expected change in EPS – 2023 |
|---|---|---|
| Industrial | $42.44 | 19.5% |
| Communication Services | $11.89 | 16.2% |
| Consumer Discretionary | $41.88 | 36.5% |
| S&P500 | $227.27 | 10.0% |
What sectors will grow in 2022?
As 2022 approaches, some of the key market sectors to watch include oil, gold, autos, services and housing. Other major areas of concern include winding down, interest rates, inflation, payment for order flow (PFOF), and antitrust.
Are tech stocks good long term?
“In general, many tech stocks are great long-term bets, but having a winning long-term investment when you’re forced to exit short-term due to liquidity issues doesn’t help,” he explains.
Are tech stocks a good investment? Benefits of investing in tech stocks Buying tech stocks allows investors to increase risk in their portfolios to increase their returns. While the risk is certainly a two-way street, buying fast-growing tech names is a very effective way to boost returns in a low interest rate environment.
Is it good to keep stock for long term?
Many market experts recommend holding stocks for the long term. The S&P 500 only posted losses in 11 of the 47 years from 1975 to 2022, which made stock returns quite volatile in shorter time frames. 1 However, investors have historically experienced a much higher rate of long-term success.
How long should you keep stocks long term?
“Forever” is still the ideal holding period, at least in Warren Buffett’s time-tested investment philosophy. If you can’t hold this stock indefinitely, true long-term investors should at least be able to buy it and then forget about it for 10 years.
What is the benefit of holding stocks long term?
The main advantage of long-term stocks is that they generate high returns on the total investment. These returns can take the form of periodic dividend payments or capital gains realized on the resale of securities. Long-term stocks are associated with lower risks compared to short-term stocks.
Will the Stock Market Crash 2022?
Equities in 2022 are off to a terrible start, with the S&P 500 down nearly 20% year-to-date to May 23. Big tech investors are increasingly concerned about the outlook for economic growth and are pulling out of risky parts of the market that are sensitive to inflation and rising interest rates.
Will the stock market crash in 2022? Our experts agree that the road will likely be bumpy for the rest of 2022. But crash or not, recession or not, history tells us time and time again that it’s part of the journey.
What happens if the stock market crashes?
Companies can go bankrupt or fold entirely. Some investors may lose all of their net worth in the blink of an eye, while others may be able to recoup some or all of their savings by selling stocks before their prices drop. Ultimately, a stock market crash can lead to mass layoffs and economic strife.
Do prices go up when the stock market crashes?
A crash is marked by a sharp and sudden drop in stock prices, usually following an uptrend in the stock market, also known as a bull market. Worried about the economic downturn? Protect your finances during inflation and market volatility with our guide.
Will there be another 1929 crash?
Maybe, but it would take a repeat of the devastating bipartisan policies of the 1920s and 1930s to get there. For the most part, economists now know that the stock market did not cause the crash of 1929. That in itself was a symptom of extremely erratic changes in the nation’s money supply.
Could the stock market crash happen again?
It hit 28 just before the stock market crash of 2008. That’s a warning sign, but a sign isn’t a certainty. No one can say for sure when the next stock market pullback will occur.
Will the market crash again in 2021?
Nope! They are more concerned about what will happen in five, 10 or even 20 years. And it helps them stay cool when everyone is freaking out like it’s the year 2000 again. only dropped by about 5%.
Will the stock market crash again?
Nope! They are more concerned about what will happen in five, 10 or even 20 years. And it helps them stay cool when everyone is freaking out like it’s the year 2000 again. only dropped by about 5%.
What is happening to the stock market in 2022?
Stocks in 2022 are off to a terrible start, with the S&P 500 down nearly 20% year-to-date to May 23. Big tech investors are increasingly concerned about the outlook for economic growth and are pulling out of risky parts of the market that are sensitive to inflation and rising interest rates.
What is the most undervalued tech stock?
| Company | Last prize | 1 year back |
|---|---|---|
| FLWS1-800-FLOWERS.COM | US$9.76 | -68.0% |
| QRTE.AQurate Retail | $3.65 | -73.2% |
| YALAYalla Group | $3.76 | -75.9% |
| GSMGGlory Star New Media Group Holdings | $0.70 | -80.5% |
Is Nvidia stock a buy?
This exciting potential has fueled NVIDIA’s strong performance: in 2021, its third-quarter revenue grew 50% year-over-year and its share price rose nearly 127% on the ‘year. Forward-thinking investors may want to include these cutting-edge large-cap stocks in their portfolio.
What’s the prediction for Nvidia stock? Stock Price Prediction The 41 analysts providing 12-month price predictions for NVIDIA Corp have a median target of 250.00, with a high estimate of 433.82 and a low estimate of 130.00. The midpoint estimate represents a 33.52% increase from the last price of 187.24.
Is Nvidia a Buy Sell or Hold?
Nvidia Stock EPS, SMR Ratings The EPS rating compares a company’s earnings growth to that of other stocks. Its SMR rating assesses sales growth, profit margins and return on equity. Of 47 analysts covering NVDA stock, 39 rate it as a buy. Seven have a hold and one has a sale, according to FactSet.
Is Nvidia a sell?
Nvidia has the potential to grow for many years. Nvidia (NVDA 5.55%) has seen its share price fall nearly 50% since peaking at $346 in late 2021, but the graphics chip leader has continued to generate strong growth for investors.
Is Nvidia a good stock to hold?
Nvidia has the potential to grow for many years. Nvidia (NVDA -1.52%) has seen its share price fall nearly 50% since peaking at $346 in late 2021, but the graphics chip leader has continued to generate strong growth for investors .
Is Nvidia stock expected to rise?
Stock Price Prediction The 41 analysts providing 12-month price predictions for NVIDIA Corp have a median target of 250.00, with a high estimate of 433.82 and a low estimate of 130.00. The midpoint estimate represents a 46.08% increase from the last price of 171.14.
Is Nvidia a good long term stock?
Nvidia has seen something like a 7,400% increase in its stock price over the past decade. This largely reflects its excellent performance over the same period.
