3 technical stocks are undervalued with a 40% increase potential.

  • In this article, we will focus on finding new, undervalued tech stocks that are poised to outperform in the current downturn in the industry.
  • Using the Investing Pro+ stock picker, we’ve highlighted three companies that are relatively cheap compared to their peers, thanks to strong fundamentals and low valuations.
  • With that in mind, Applied Materials, Dell Technologies, and NortonLifeLock fit the bill.
  • Looking for more low-key stock ideas to add to your portfolio? InvestingPro+ members have exclusive access to our research tools and data. read more

Tech stocks have suffered hard since the start of 2022 as concerns surrounding the Federal Reserve’s plans to tighten monetary policy aggressively led to a broad-based decline in the sector.

That’s why, using the Investing Pro+ stock screening tool, we’ve taken a systematic approach to filtering over 10,000 stocks listed on US stock markets and creating a shortlist of technology companies.Undervalued stocks with bright growth prospects.

We decided to focus only on stocks with a market capitalization of $10 billion or more and a price-to-earnings (P/E) ratio of less than 20. We then looked for companies whose fair value appreciation on InvestingPro exceeded 40%. .

Source: Investing Pro

After applying the criteria, we ended up with a total of only six companies on our watch list.

InvestingPro . Watch List

Source: Investing Pro

Looking closely, we’ll detail three of the top picks that should provide some of the highest returns based on InvestingPro models.

1- Applied materials

  • Financial safety rating: B
  • P/E Ratio: 14.7
  • Market value: $96.2 billion
  • Pro + highest fair value: +43.9%

Applied Materials (NASDAQ:) is a leading provider of manufacturing equipment, services, and software to the semiconductor industry.

It also provides products for the design and production of liquid crystal displays and organic light-emitting diode (OLED), as well as other display technologies for consumer devices, such as televisions, smartphones, tablets, laptops and personal computers.

The Santa Clara, California-based company has struggled this year, lagging significantly behind the general benchmark, as well as the broader market, due to shortages in the global supply chain.

Since the beginning of the year, AMAT’s stock price is down about 31%. Even more worryingly, shares of microchip equipment suppliers have fallen about 35% since Jan. 14, when it hit a record high of $167.06.

AMAT ended Tuesday’s session at a 13-month low of $108.92, giving the semiconductor equipment maker a market capitalization of $96.2 billion.

AMAT D1

Despite its poor prices, Applied Materials stock appears to be a solid value bet for investors looking to play a rebound in the semiconductor industry in the coming months.

In fact, AMAT has a relatively low P/E ratio of 14.7, which makes it significantly cheaper than some of its notable semiconductor group peers, such as ASML Holding (NASDAQ :), KLA-Tencor Corporation (NASDAQ :), and Teradyne (NASDAQ :)).

AMAT . comparison

AMAT . comparison

Source: Investing Pro

Pro + It highlights some other key facts about the stock, with share buybacks and healthy cash flow points being the most notable:

Profile AMAT

Source: Investing Pro

Next, Pro+ gives a quick look at the financial position of the chip hardware vendor, which scored 4/5, thanks to good prospects for profit and sales growth:

Financial Health AMAT

Source: Investing Pro

At less than $110, AMAT is at a steep discount according to InvestingPro’s quantitative models, which indicate AMAT shares are up about 44% from current levels over the next 12 months.

AMAT . fair value estimates

AMAT . fair value estimates

Source: Investing Pro

Applied Materials, whose earnings and revenue far exceeded expectations during that time, will release its next financial results after trading closes on Thursday, May 19.

The consensus calls for earnings per share of $1.90 for the fiscal second quarter, a 16.5% improvement over earnings per share of $1.63 a year earlier. Revenue is expected to grow approximately 14% year-over-year to $6.34 billion.

AMAT - EPS Estimates

AMAT – EPS Estimates

Source: Investing Pro

2. Dell Technologies

  • Financial safety rating: B
  • P/E Ratio: 7.1
  • Market value: $35.3 billion
  • Pro + Bullish Fair Value: +50.2%

Dell Technologies (NYSE:), born from the merger between Dell and EMC Corporation in 2016, is a leading global provider of information technology solutions.

Dell’s product portfolio includes personal computers, servers, computer software, computer security, networking, and information security services.

Due to the fragility of many of the big technical names, shares of Texas-based Round Rock have been experiencing some turmoil lately, posting a string of new 52-week lows in recent sessions.

DELL – which is down 17.2% year-to-date – closed at $46.51 last night, giving it a market capitalization of $35.3 billion. At current levels, the shares are nearly 60% below their all-time high of $115.00 in October 2021.

Dell-D1

as pointed out Pro +DELL is in an excellent financial position, with solid earnings and growth prospects, along with an attractive valuation.

DELL'S FINANCIAL HEALTH

Source: Investing Pro

It trades at a P/E ratio of 7.1, which is well below the industry average of 12.7 and significantly cheaper compared to its peers, which boast a collective P/E ratio of 14.7.

Additionally, Dell leads the industry in some measures of profitability and sales, with revenue growth of approximately 17%, outperforming its peers by 12.5%.

View comparison Dell

Source: Investing Pro

Not surprisingly, DELL is currently undervalued, according to InvestingPro models, and could see a 50% rise over the next 12 months with a fair value of $69.84 per share.

DELL - FAIR VALUE

Source: Investing Pro

Dell is expected to announce its financial results for the first quarter after trading closes on Friday, May 27. Consensus estimates put earnings per share of $1.40 on revenue of $25.3 billion.

DELL - Earnings Estimates

DELL – Earnings Estimates

Source: Investing Pro

3- Norton Live Look

  • Financial safety rating: B
  • P/E Ratio: 16.0
  • Market value: $14.8 billion
  • Pro + Bullish Fair Value: +41.7%

NortonLifeLock (NASDAQ: formerly Symantec Corporation) is a leading provider of cybersecurity software and services. The Fortune 500 company’s products include Norton 360 security offerings, Norton Security, Norton Secure Virtual Private Network (VPN), Avira Security and other consumer security solutions.

Tempe, based in Arizona, has benefited from strong demand for its security tools and products amid heightened digital threats. Despite the current slump in tech stocks, NortonLifeLock stock is down just 2% year-to-date, easily outperforming the index over the same period.

NLOK reached an all-time high of $30.92 on Feb 10; It closed at $25.45 on Tuesday. At current levels, the cybersecurity company — which is up about 15% in the past 12 months — has a market capitalization of $14.8 billion.

NLOK D1

With a Pro+ financial health score of 4 out of 5 and a very attractive rating, NLOK appears to be a good option for investors looking to hedge against greater volatility in the coming months.

Financial Health NLOK

Financial Health NLOK

Source: Investing Pro

Due to the ever-rising demand for security software to protect PCs and mobile devices from viruses and cyberattacks, NLOK shares could see a rise of about 42%, according to the Investing Pro model, bringing them closer to Fair value $36.06 per share.

NLOK - Fair Value

Source: Investing Pro

Analysts are also bullish about the software-as-a-service company, citing strong market fundamentals. The average NLOK analyst price target is around $30.00, which is about 16% higher than current levels over the next 12 months.

NLOK - Goal Analyzer

NLOK – Goal Analyzer

Source: Investing.com

NortonLifeLock is expected to report solid earnings and revenue growth when it releases its next financial results on Thursday, May 5 after trading closes. The consensus calls for earnings per share of $0.45 for the fourth fiscal quarter, a 12.5% ​​improvement over earnings per share of $0.40 a year earlier.

Revenue is expected to grow approximately 6% year-over-year to $709.6 million.

NLOK - Earnings Estimates

NLOK – Earnings Estimates

Source: Investing Pro

Leave a Reply

Your email address will not be published.