Only These 4 AI Stocks Are Considered Undervalued

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Stocks with particularly low price-to-sales ratio* (PSR) and  price earnings-to-growth rate ratio** (PEG) scores indicate that the market has them appropriately valued. On the other hand, stocks with high PSR and PEG scores indicate that investors and analysts alike have high growth expectations for the companies causing them to bid up their stock prices which result in overvaluation to varying degrees. That seems to be the current situation with artificial intelligence and related (AI&R)  stocks with an estimated +90% scoring well in excess of accepted levels (see asterisked notations at the end of the article for those accepted levels). In fact, according to an exhaustive review of over 100 AI & related (AI&R) stocks by yours truly only 4 of them have valuation metrics that indicate that they are currently under valued.

Below are the 4 companies, ranked in descending order of their combined PSR and PEG scores, along with their descriptions, market capitalizations, analyst price forecasts, and increases in their stock prices YTD:

  1. Lantronix (LTRX):
  2. StoneCo (STNE):
    • is a Brazilian fintech company providing financial technology solutions to enable merchants to conduct electronic commerce seamlessly across in-store, online, and mobile channels.
    • PSR: 1.4
    • PEG: 0.3 
    • Market Capitalization: $3.3B
    • YTD Increase: 26.0% ( the Internet - Software has a 43.4% YTD return - Source)
    • Price Forecast: Based on short-term price targets offered by 11 analysts, the average price target for StoneCo Ltd. comes to $15.47. The forecasts range from a low of $10.00 to a high of $22.00. The average price target represents an increase of 50.93% from the last closing price of $10.25. Source
    • Read:
  3. Dell Technologies (DELL):
    • is a provider of information technology solutions including servers, storage, and networking products as well as commercial and consumer notebooks, desktop computers and workstations.
    • PSR: 0.5
    • PEG: 1.3
    • Market Capitalization: $50B
    • YTD Increase: 71.3% (the Computers - IT Services category has a 15.46% YTD return - Source)
    • Price Forecast: Based on short-term price targets offered by 14 analysts, the average price target for Dell Technologies comes to $70.29. The forecasts range from a low of $53.00 to a high of $80.00. The average price target represents an increase of 4.54% from the last closing price of $67.24. Source
    • Read:
  4. Super Micro Computer (SMCI):

From the above analysis, it suggests, despite their varying stock appreciations YTD, that the stocks are not overpriced, and warrant consideration. The metrics above change daily as their stock prices do so this article will be updated weekly going forward to provide timely information.

  • Definitions:
    • *The price-to-sales ratio (PSR) describes how much someone must pay to buy one share of a company relative to how much that share generates in revenue for the company. and, as such, determines whether its stock is cheap or overpriced in comparison to its peers. While the ideal ratio depends on the company and industry, the ratio is typically good when the value falls between one (1)  and two (2) and a ratio of less than one (1`) is even better. According to FullRatio (see here), it is 2.18 for information technology services stocks.
    • **The price earnings-to-growth ratio (PEG ratio) is considered to be an indicator of a stock's true value. A PEG lower than 1.0 is best, suggesting that a company is relatively undervalued.

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Disclosure: None

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