Top 5 Tech Stocks Under $5
As computer technology continues to advance at a breakneck pace, demand of computer components and networks grows as well. These five computer technology stocks are not only poised to benefit from these trends, but are cheap from a price perspective and have huge upside potential too.
So if you are looking for some small cap picks in the technology world, consider these ‘buy’ ranked stocks. They have all seen positive estimate revisions as of late and could be the top five tech stocks under $5/share:
Telecommunication Systems Inc. (TSYS)
Telecommunication Systems was founded in 1987 and has been publicly traded since the early 2000’s and was hit hard in the tech bust, but has been making a positive comeback in the last couple years. The company operates in two segments, government and commercial. The government segment designs, furnishes, installs, and operates wireless communication systems with clients such as the U.S. department of defense.
The commercial segment enables 9-1-1 calls routing through cellular, voice over internet protocol, and next generation technology. The company operates in the U.S, Europe, Latin America, and Asia. The stock is currently trading at $3.04 per share and is up about 31.60% for the year.
Financial Situation
Revenue was reported at $86.2 million Adjusted net income was $3.1 million or $0.05 per diluted share, up 41% from $2.2 million or $0.04 per diluted share in the first quarter of 2014, and compares favorably to an adjusted net loss of $690,000 or $(0.01) in the second quarter of 2013.
Grew volume and pipeline in NextGen 9-1-1 deployment, software and managed services contracts.
Doubled contract ceiling to $6.6 million for DoD's Art of Exploitation cyber training and support and was engaged by E-volve Technology Systems to enable delivery of TCS professional services to the U.S. Air Force Cyber Operations Training Program, with a total TCS contract value of $3.3 million.
Issued 12 U.S. and foreign patents bringing the company's patent portfolio to 361 patents issued in the U.S. and abroad, with more than 300 patent applications pending and 37 monetization projects underway at various stages of execution.
"We entered 2014 with the commitment that 2013 was the floor on our company's operating results, and the second quarter represents another step of steady improvement," said Maurice B. Tose, TCS chairman and CEO. "As the adverse impact of government budget turbulence has abated and we continue to manage company costs, we are focusing on higher EBITDA and other operating metrics.”
Analysis
Telecommunication Systems is generating about $345 million for the past year and has a market value of $181.03 million with a P/S (ttm) ratio of .52. The forward P/E (fye December 2015) is 12.20 with a PEG ratio (5 yr expected) at .82. These numbers gives a good indication that the stock is a value stock where the market may not be currently accounting for its potential growth in the price of the stock.
The company has beat earnings estimates over the past year by an average 88.89% and all analysts in our coverage universe have upgraded their earnings estimate for the current year. We currently have the communication company with a Zacks Rank #1 (strong buy), and rank It in the top 37% of all industries.
Planar Systems Inc. (PLNR)
Planar Systems, Inc., together with its subsidiaries, develops, manufactures, and markets electronic display products and systems. Planar Systems, Inc. provides its products to retailers, educational institutions, government agencies, businesses, utilities and energy firms, and home theater enthusiasts under the Planar, Clarity, and Runco brands primarily in North America, Europe, and Asia.
The company was founded in 1983 and is headquartered in Beaverton, Oregon. The company has been public since the mid 1990’s and has been struggling ever since, but recently has been making major changes and is up about 67.46% for the year, trading at $4.46 per share.
Financial Situation
Planar Systems recorded sales of $43.9 million and GAAP income per share of $0.03 in its third fiscal quarter. Sales of digital signage products totaled $21.4 million in the third fiscal quarter of 2014, a 53 percent increase over the same period a year ago. Total revenue increased 17 percent compared to the third quarter of fiscal 2013. The Company’s consolidated gross profit margin, as a percentage of sales (on a non-GAAP basis), was 24.4 percent in the third quarter of 2014, up from 21.7 percent in the third quarter of 2013.
Quarterly sales of digital signage products increased 53 percent to $21.4 million, compared to the third fiscal quarter of 2013.
Non-GAAP EBITDA totaled $1.6 million (see reconciliation table), resulting in $4.4 million in non-GAAP EBITDA fiscal year to-date.
Rolled out the Clarity Matrix Video Wall Calculator, a first-of-its-kind, free online tool that makes it easier, faster and more accurate to design and install video walls.
Advanced the adoption of Ultra HD with the introduction of four new 4K displays: Planar UltraRes 98”, Planar EP-Series 58” and 65”, and Planar IX-Series 28” UHD displays.
“Our third quarter results came in above our expectations for both revenue and profits, bolstered by strong growth in sales of our strategic focus area of digital signage products,” said Gerry Perkel, Planar’s president and chief executive officer. “As a result of the strong performance in the third quarter, coupled with a favorable outlook for the fourth quarter, we are increasing our estimates for revenue and non-GAAP EPS for the full fiscal year.”
Business Outlook
Looking forward, the Company currently expects to see continued strong revenue for digital signage and custom C&I products in the fourth fiscal quarter of 2014, and therefore anticipates revenue in the range of $48 million to $50 million and non-GAAP income per share of $0.08 to $0.10. As a result, the company has raised its estimates for the full fiscal year 2014, and currently expects revenue in the range of $173.4 million to $175.4 million and non-GAAP income per share of $0.21 to $0.23.
Analysis
Planar Systems generated about $171.09 million in the past year and has a market value of about $97.80 million with a P/S (ttm) of about .54. The forward P/E (fye Sep 2015) is 15.39 and has a PEG (5 yr expected) at 1.01. Looking at these numbers, the market seems to be accounting better for growth in the price of the stock, and is still considered to be a bargain given the forward P/E ratio.
The company has beat earnings estimates in the past year with an average surprise of 262.5% and in the past 60 days, 100% of our analysts have upgraded their earnings estimates. We currently have the company at a Zacks Rank #1 (strong buy) and in the top 6% of all industries.
Semiconductor Manufacturing International Corp (SMI)
Semiconductor Manufacturing International Corporation, an investment holding company, is primarily engaged in the computer-aided design, manufacturing, testing, packaging, and trading of integrated circuits and other semiconductor services. It also designs and manufactures semiconductor masks. In addition, the company is engaged in the construction, operation, and management of living quarters, schools, and supermarkets.
It operates principally in the United States, Europe, and the Asia Pacific. The company was founded in 2000 and is headquartered in Shanghai, China. The stock is relatively new and has been public since 2004 and has seen a net return of 82.10% in the last five years. The stock is currently trading at $4.64 per share and YTD is up 18.48%.
Financial Situation
In the company’s 2Q14, they reported $511.3 million with an increase of 13.4% quarter over quarter mainly due to an increase in wafer shipments in 2Q14. Gross profit was $143.1 million in 2Q14, an increase of 48.8% quarter over quarter from $96.1 million in the first quarter and gross margin was 28% in 2Q14, up about 21.3% in the last quarter due to an increase in fab utilization.
Third Quarter 2014 Guidance
According to the company’s 8-K, Revenue is expected to increase 1% to 5% quarter over quarter and gross margin is expected to range from 24% to 26%. One of the main growth drivers for 2015 will be 28nm chips and the company is on track to have production ramp up in 2015. The second quarter recovery ended with strong financials and profitability for SMIC. Fiscal year 2015 is looking optimistic as they prepare for growth on 8-inch and 28nm.
Analysis
This semiconductor company generated revenue of $1.99 billion in the last year and has a market value of 3.23 billion with a P/S ratio of 1.64. Trailing P/E (ttm) is 18.52 and forward PEG ratio (5 yr expected) is 1.20. These numbers indicate that the relative value of the stock price is similar to the other companies in the industry, but is different by having their own potential growth accounted in its price more efficiently than the other stocks.
The company has beaten earnings estimates in the past year with an average surprise of 94.45% and has an EPS consensus estimate of $0.06 for the current quarter. We currently have the stock at a Zacks rank #2 (buy) and rank the company in the top 32% of all industries.
ChyronHego Corporation (CHYR)
ChyronHego Corporation provides software and hardware products and solutions and provides production, custom development, timing and data, technical, support, and training services. ChyronHego Corporation markets its products and systems to broadcast, production, and post-production facilities, as well as multimedia outlets, such as Web, mobile, and print companies. The company has been publicly traded since 2004 and is up 144% in the past two years, and is currently trading at $2.48 per share.
Financial Situation
Revenues for the second quarter of 2014 increased 37% to $14.7 million as compared to $10.7 million in the second quarter of 2013. This $4.0 million increase was primarily driven by the contribution of services from the 2013 merger with Hego, which included a sale of tracking systems to a European Soccer League.
Net income for the second quarter of 2014 was $2.9 million, or $0.08 per basic and diluted share, as compared to a net loss of $2.1 million, or $(0.09) per basic and diluted share, in the second quarter of 2013.
President and CEO Johan Apel commented, “We are very excited to show our first profitable quarter since Q2 2011. Our efforts in both keeping costs under control and driving revenue growth are bearing fruit. We are expecting growth in revenues to continue in the coming quarters. In terms of revenues, we are ahead of plan in both the U.S. and Europe and we have a positive outlook regarding the development of these markets. Our customers are investing with us and they appreciate our efforts to create the most complete offering within broadcast graphics.”
Analysis
ChyronHego generated annual revenue of $56 million with a market value of $91.40 million with a P/S ratio of 1.70. Forward P/E (fye Dec 2015) is 17.79 indicating good value for the stock given projected EPS. The company has beaten earnings estimates for the past year with an average surprise of 3.75% and a majority of analysts have upgrade their earnings estimates for the current year.
We currently have the company with a Zacks rank #1 (strong buy) and is #1 ranked of all industries. This company has a very optimistic outlook for future growth so investors should be in the lookout for news regarding this recently merged company.
AXT Inc. (AXTI)
AXT, Inc., together with its subsidiaries, designs, develops, manufactures, and distributes compound and single element semiconductor substrates. AXT, Inc., together with its subsidiaries, designs, develops, manufactures, and distributes compound and single element semiconductor substrates. The company also provides semi-conducting substrates made from gallium arsenide that have applications in light emitting diodes, lasers, and optical couplers.
AXT, Inc. sells its products through direct sales force in the United States and China, as well as through independent sales representatives in Europe and other parts of Asia. The company was formerly known as American Xtal Technology, Inc. and changed its name to AXT, Inc. in July 2000. AXT, Inc. was founded in 1986 and is headquartered in Fremont, California. The company has been publicly traded since the late 1990’s and is up about 37.57% in the past five years and is currently trading at $2.44 per share.
Financial Situation
Revenue for the second quarter of 2014 was $21.4 million compared with $19.3 million in the first quarter of 2014. Total gallium arsenide (GaAs) substrate revenue was $11.3 million for the second quarter of 2014, compared with $8.5 million in the first quarter of 2014.
Indium phosphide (InP) substrate revenue was $3.0 million for the second quarter of 2014, compared with $2.2 million in the first quarter of 2014. Germanium (Ge) substrate revenue was $1.7 million for the second quarter of 2014, compared with $3.2 million in the first quarter of 2014. Raw materials sales were $5.4 million for the second quarter of 2014, consistent with $5.4 million in the first quarter of 2014.
“Q2 was a positive quarter for AXT,” said Morris Young, chief executive officer. “Through a combination of higher revenues, positive sales mix, other income and the first full quarter of benefit from our cost-savings measures, we achieved profitability ahead of our plan. In addition, with continued focus on cash management, we drove improvement in our balance sheet, growing our cash position and reducing inventory.”
“While the business environment remains challenging, during the second quarter we experienced stronger demand in both our semi-insulating and semi-conducting gallium arsenide substrates as well as continued strength in indium phosphide. Looking forward, we remain cautiously optimistic about our opportunities to drive further growth in our business.”
Analysis
The company generated revenue (ttm) of $79.92 million with a market value of $79.05 million and a P/S (ttm) ratio of 1.01. The forward P/E (fye Dec 2015) is 122.00 and the PEG ratio (5 yr expected) is – 3.02 indicating that in the next year, the stock will be more pricey relative to the other stocks, but in the next 5 years, the current value of the stock is extremely undervalued given its 5 year projected growth rate.
Overall, the stock is still a value stock, but we will have to see in the future where this company goes with its exciting line of products in the pipeline. The company has beaten earnings estimates by an average surprise of 53.96% over the past year and in the last 60 days, 100% of analysts have upgraded their earnings estimates for the current quarter and year. We currently have the stock as a Zacks Rank #1 (strong buy) and is in the top 32% of all industries.
Bottom Line
While all these stocks are relatively cheap from a price per share perspective, investors should look carefully at what each company has to offer and see if they are a good fit for a high risk portion of a portfolio. All of these stocks could be volatile, but given the recent earnings estimate revisions, could be potential outperformers in the weeks ahead for investors willing to take the plunge on these high risk, but possibly high reward, stocks trading under $5/share.
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Read the analyst report on TSYS
Read the analyst report on PLNR
Read the analyst report on SMI
Read the analyst report on CHYR
Read the analyst report on AXTI
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