3 Undervalued Tech Stocks To Buy On Dips

macro photography of black circuit board

Image Source: Unsplash

The technology industry has not been able to maintain last year’s performance so far because the economic recovery has motivated investors to rotate away from expensive tech stocks and into cyclical stocks. This shift is evidenced by the Technology Select Sector SPDR Fund’s (XLK) 2.8% loss over the past month.

However, growing demand for tech solutions from almost all industries, and technological advances in cloud computing, artificial intelligence (AI), and 5G communications, among other areas, are expected to shape the industry’s future.

Fundamentally sound tech players Sharp Corporation (SHCAY), Diodes Incorporated (DIOD), and Extreme Networks, Inc. (EXTR) have witnessed price declines lately thanks to the broader industry’s downtrend, and they look undervalued now. So, given their solid growth prospects, we think betting on these stocks at their current price levels could generate significant returns in the near-term.

Sharp Corporation (SHCAY)

Headquartered in Sakai, Japan, SHCAY manufactures and sells electronic components and consumer electronic products, among others. It operates through four segments: Smart Homes, Smart Business Solutions, Internet of Things (IoT) Electronics Devices, and Advanced Display Systems.

The company’s revenue for its fiscal fourth quarter ended March 31, was $22.30 billion, which represents a 7.2% year-over-year increase. Its gross profit increased 4% from the same period last year to $3.90 billion. SHCAY’s net income increased 258.8% year-over-year to $479.33 million.

Analysts expect SHCAY’s annual revenue to be $22.50 billion in fiscal 2022, which represents a 107.3% year-over-year increase. In terms of forward EV/Sales, SHCAY has been recently trading at 0.63x, which is 60.4% lower than the 1.59x industry average. Its forward EV/EBITDA of 9.77x is also lower than the 11.73x industry average.

SHCAY announced on May 17 that it has been nominated by Fisker Inc. to develop technologies that support next generation in-vehicle screens and interfaces. This collaboration might help it develop and deliver more creative products to the market. The stock has gained 65.9% over the past year and has been recently trading at around $4.34. It is has been trading 24.5% below its $5.67, 52-week high.

1 2 3 4
View single page >> |

Disclaimer: Information is provided 'as-is' and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use, please ...

How did you like this article? Let us know so we can better customize your reading experience.


Leave a comment to automatically be entered into our contest to win a free Echo Show.