Stocks fell sharply during regular trading Wednesday, one day after the S&P 500 slipped 2%, as coronavirus fears take center stage again. The downturn came after Federal Reserve Chairman Jerome Powell confirmed growing worries about the extent of the coronavirus economic crisis, saying that the road ahead remains “highly uncertain and subject to significant downside risks.”
Powell also noted that more actions will likely need to be taken to help support the U.S. economy during these unprecedented times. Still, Wall Street has seemingly been willing to look beyond the current coronavirus chaos, job losses, and rough corporate earnings, with the S&P 500 up over 27% since the market’s March 23 lows.
The market remains forward looking, and economies around the world are starting to slowly reopen. This means that Wednesday could have been a ‘sell the news’ move. On top of that, we seem likely to remain in a broader ‘don’t fight the Fed’ mode, given that the central bank, and the U.S. government, seem poised to do all they can to boost the economy and the markets.
Clearly, stocks could fall again, but the seven week-plus run from the market’s lows helps showcase why it’s likely prudent to remain at least somewhat exposed at all times.
That said, investors need to look for stocks that appear ready to grow during the coronavirus, within solid industries. And tech, from giants such as Apple AAPL and Microsoft MSFT to fresh faces like Zoom ZM, have proven that the broader industry appears to be a safe-haven.
With this in mind, let’s dive into three tech industry stocks trading under $10 a share that investors might want to buy now…
(note: the prices listed are the prices at the close of regular trading on Wednesday, May 13)
Amkor Technology, Inc. AMKR
Prior Close: $9.48 USD
Amkor provides outsourced semiconductor packaging and test services, and it’s currently a strategic manufacturing partner for some leading chip firms, foundries, and electronics OEMs. AMKR on April 27 crushed our Q1 earnings estimate by 100%, while its sales jumped nearly 30% and topped our outlook. The company also remained largely confident about its outlook, and said it was “well-prepared to deal with fluctuations in near-term demand due to recent macroeconomic events.”
AMKR shares have surged over 60% since March 18, from under $6 a share to its current price. And Amkor still has nearly 40% more run to run before it hits its 52-week highs of over $15 a share. Along with its ‘cheap’ stock price, AMKR trades at just 0.51X forward 12-month Zacks sales estimates, which marks a discount against its year-long highs and its industry’s 3.6X average.
Our current Zacks estimates call for Amkor’s adjusted fiscal 2020 earnings to climb 25% on the back of 13% higher sales that would see it pull in $4.57 billion. Amkor is currently a Zacks Rank #3 (Hold) that sports an overall “A” VGM score, and is part of an industry that rests in the top 19% of our more than 250 Zacks industries.
Prior Close: $8.63 USD
NeoPhotonics designs and makes advanced hybrid photonic integrated circuit-based modules and subsystems utilized in high-speed communications networks across telecom and datacenters. The San Jose, California-based firm, like AMKR, topped our Q1 fiscal 2020 estimates in late April, with revenue up 23%. NeoPhotonics has seen its earnings revisions surge since it reported its first quarter results, which is no easy task in this environment. This positivity helps NPTN earn a Zacks Rank #1 (Strong Buy) right now.
Looking ahead, NeoPhotonics is projected to see its Q2 sales jump 21%, to help it climb from an adjusted loss of -$0.03 a share in the year-ago period to +$0.12. Overall, its full-year revenue is projected to pop roughly 11.5% both this year and next, with its FY20 EPS figure expected to skyrocket from +0.01 to +$0.55 a share. NPTN’s bottom-line expansion is expected to carry over into 2021 as well.
NPTN rocks a “B” grade for Value and an “A” for Growth in our Style Scores system and its Semiconductor – Communications industry ranks in the top 17% of our over 250 Zacks industries. Meanwhile, NeoPhotonics shares have soared over 80% since March 18 and are up over 50% in the last 12 months.
NPTN has also traded at over $15 a share in the past five years. And NeoPhotonics presents solid value, trading at 1.1X forward 12-month sales. This marks a discount against its industry’s 3.3X average and its own 12-month high of 1.2.
Zix Corporation ZIXI
Prior Close: $5.09 USD
Zix is an email security firm that specializes in data loss prevention, threat protection, email encryption, and more. ZIXI is currently a Zacks Rank #3 (Hold) that sports an “A” grade for Growth in our Style Scores system. Zix’s fiscal 2020 revenue is projected to climb over 22%, with its adjusted earnings projected to skyrocket 133% to reach $0.56 a share. ZIXI has also seen its Q2 and FY20 EPS estimates climb since it reported its first quarter results on May 6.
Meanwhile, ZIXI stock has now climbed roughly 70% since March 18. Despite the recent run, the company’s shares remain over 50% off its 52-week highs. ZIXI also trades at a significant discount compared to its industry at the moment in terms of forward 12-month sales, 1.5X vs. 6.6X.
Similar to its peers, the provider of cloud email security solutions is part of a highly-ranked Zacks industry, and it could grow as millions of people work from home. “The COVID-19 pandemic is accelerating digital transformation and is increasing the need for robust business communications solutions that ensure organizations remain secure, compliant and productive,” CEO David Wagner said in prepared Q1 remarks.
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