5 Tech Stocks With Impressive P/S Ratios To Buy Now

The current bull market has come at a time when the traditions of Wall Street have changed significantly. Some of these changes, like the transition from on-the-floor traders to algorithm-based digital trading, are a simple result of evolving technology. Others, such as a shift in our preferred methods for determining value and growth potential, have been a bit more contentious.

Indeed, one of the most polarizing new trends on the stock market relates to the use of traditional valuation metrics—or the lack of use, I should say. For better or worse, investors are quick to disregard old-school methods in favor of heavy optimism about the future.

This manifests itself the most in the technology sector, and it’s the reason that Tesla (TSLA) and Amazon (AMZN) continue to be two of the year’s hottest stocks—despite sporting “F” grades for Value in our Style Scores system.

But at least one traditional valuation metric continues to be a favorite in today’s tech sector: the Price/Sales ratio. The P/S ratio is a measurement of a company’s stock price against its annual revenues, and many investors prefer it as a valuation metric because it disregards management manipulation, accounting estimates, and other variables that go into earnings results.

What’s more, the P/S ratio is a favorite among tech investors because the sector presents unique challenges, like high startup costs and cyclical consumer trends, which can sometimes make earnings-related metrics a less-accurate gauge of company performance.

With all of this said, a stock with an impressive P/S ratio and a strong Zacks Rank might just be the perfect combination in today’s tech world. Check out these five below:

1. Fitbit (FIT - Free Report)

Wearable tech giant Fitbit currently sports a P/S ratio of 0.78, which bests the “Electronics - Measuring Instruments” industry average of 1.62. Unfortunately, Fitbit’s better-than-average P/S figure has come as a result of slumping share prices, not strong sales growth.

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