2 Buy-Rated Value Stocks In The Technology Sector

NYSE: IBM | International Business Machines Corporation  News, Ratings, and Charts

The charging stock markets over the past year against a backdrop of a recessionary economy can be largely attributed to the exceptional growth of the technology sector. Consequently,  the valuations of tech stocks have gotten stretched and investors are growing increasingly skeptical about this. Analysts are predicting a potential market correction and are of the opinion that it is time for investors to adopt a more fundamental approach to investing. Moreover, the biggest tech companies, which have been driving broader market growth, some of which are currently under federal regulatory scrutiny, are expected to witness a retreat in their share prices.

However, the recent resurgence in daily coronavirus cases is forcing many countries to reintroduce lockdown restrictions. Given this scenario, it seems less likely that the world’s dependence on digital connectivity is going to decline anytime soon.

So, it would be wise, we think, to consider investing in fundamentally strong tech stocks like International Business Machines Corporation (IBM - Get Rating) and Intel Corporation (INTC - Get Rating) that are currently trading at discounts to their peers and offer a reasonable risk-to-reward balance.

International Business Machines Corporation (IBM - Get Rating)

IBM provides integrated solutions and services worldwide. The company operates through five segments: Cognitive Solutions, Global Business Services (GBS), Technology Services & Cloud Platforms, Systems, and Global Financing.

IBM’s forward-12-month p/e of 14.02x is 57.4% lower than the industry average of 32.87x. In terms of trailing-12-month price/sales, the stock is currently trading at 1.47x, 65.8% lower than the industry average of 4.30x.

In December, IBM entered an agreement to acquire European cloud management services firm Nordcloud to boost its hybrid cloud consulting capability. The acquisition should advance IBM’s cloud migration and transformation capabilities and bolster the growth of its hybrid cloud platform.

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