3 Small Cap Tech Stocks Now On Sale

While it is still tough being a value investor in 2020, as the growth stocks have soared since the March coronavirus sell-off, the recent stock market pull-back has presented a buying opportunity for value investors.

Why not look at the technology sector and see if anything is on sale?

While the big cap technology names soared, and remain expensive, value investors might be able to find opportunities in the small cap tech names as small caps, both value and growth, have lagged.

Could value investors have a chance to get tech exposure at a reasonable valuation?

Screening for Small Cap Technology Stocks

How do you run a comprehensive screen for small cap tech stocks that are values on Zacks.com?

First, look for stocks that are Zacks Rank #1 (Strong Buy) and #2 (Buy) as that likely indicates rising earnings estimates which is a good thing.

Small caps can mean stocks with a market cap under $1 billion, but some people look as large at $2 billion. Or you can choose somewhere in the middle and go with $1.5 billion.

Adding an average volume of at least 100,000 shares a day makes sure there is plenty of trading in the stock, and some interest in it.

For P/E, a value under 15 usually means a company is cheap, especially with the S&P 500 average P/E now over 20.

But since we are looking for tech stocks, and they have rallied, boosting it up to 20 should give you more choices.

On Zacks.com’s screening tool, you can add in the sector, which in this case is Computer & Technology.

Running that screen produced 17 stocks.

3 Small Cap Tech Stocks Now on Sale

1.    Ultra Clean Holdings (UCTT - Free Reportprovides services, including critical subsystems, to the semiconductor industry. Earnings are expected to soar 165% in 2020 with sales forecast to rise 24%. Over the last month, shares have fallen 31%. It is dirt cheap, with a forward P/E of just 8.4. It’s a Zacks Rank #1 (Strong Buy).

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Disclaimer: Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the  more

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Moon Kil Woong 1 year ago Contributor's comment

Small caps have been hammered. I think they will get a big bump when Corona is over.