3 Top Tech Stocks With Compelling Valuations

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The pandemic-driven tech rally came to an abrupt halt owing to rising Treasury yields, which have been driving investors toward cheaper, turnaround candidates. However, given the tech industry’s growth potential, we think investing in undervalued industry giants Intel (INTC), Telefonaktiebolaget LM Ericsson (ERIC), and F5 Networks (FFIV) could be immensely rewarding.

Technology companies have seen robust demand for their products and services over the last year due to pandemic-driven trends. This has translated into their stock market performance, as is evidenced by iShares Global Tech ETF’s (IXN) 53.8% returns over the past year. However, the U.S.’ faster-than-expected economic recovery has motivated  investors to focus on cheaper turnaround stocks, triggering a tech sell-off earlier this year.

However, given the heightened demand for cybersecurity, cloud services and other tech products, this investor rotation is not expected to continue for long because tech players are racing to deliver the next generation of efficient and reliable products and solutions to their customers. The global information technology market is expected to grow at a 9% CAGR over the next five years to $11.87 trillion by 2025. Because the tech industry is expected to rebound soon, investing in value stocks with substantial growth potential should deliver healthy returns to investors in the foreseeable future.

We think, Intel Corporation, Telefonaktiebolaget LM Ericsson, and F5 Networks, Inc., which are  currently trading at discounted valuations versus their peers, are ideal investment bets now.

Intel Corporation

INTC designs, manufactures, and sells computer products and technologies. The company operates through six segments—Data Center Group, Internet of Things (IoT), Non-Volatile Memory Solutions Group, Programmable Solutions Group, Client Computing Group and All Other. It serves original equipment manufacturers, original design manufacturers, and cloud service providers.

On May 3, INTC announced a $3.50 billion investment in the Rio Rancho campus to equip its New Mexico operations to  manufacture advanced semiconductor packaging technologies, including its 3D packaging technology, Foveros. Construction is expected to start later this year. INTC’s investment on Rio Rancho is part of its  INTC’s IDM 2.0 manufacturing expansion plans.

INTC and Samsung Electronics Co. Ltd.   teamed up on April 28 to include INTC’s industry-best Intel Evo-verified designs, powered by 11th Gen Intel Core processors, in Samsung’s updated Galaxy Book and Galaxy Book Pro, the latest additions to its Galaxy Book lineup for 2021. Both companies hope to deliver advanced computing experiences across mobility, connectivity and performance.

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