3 Fading Tech Stocks to Pick Up on Discount
While technology-oriented enterprises command significant attention, intrepid investors may want to consider undervalued tech stocks on sale. By that, we’re talking about innovators that have printed relative discounts on the price charts, as well as being undervalued against key financial metrics, like revenue or earnings.
First, the best bargain tech picks enable investors to potentially capitalize on long-term growth trajectories that, for whatever reason, are not appreciated at the moment. Given the dramatic interest in digital innovations, targeting promising tech stocks with reduced prices may be akin to buying real estate in prime locations. Basically, over the long haul, you stand a good chance of winning.
To better filter out genuine must-buy discounted tech stocks over value traps, I have focused on two factors: each of the below ideas features a combination of institutional demand and Wall Street analyst support. Finally, make sure you realize that there are no guarantees. Sometimes discounted ideas can continue to go sour. If you can accept this risk, below are undervalued tech stocks on sale.
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Undervalued Tech Stocks: Leidos (LDOS)
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A U.S.-based defense, aviation, and information technology firm, Leidos (NYSE:LDOS) also specializes in biomedical research. While broadly relevant, LDOS happens to be one of the undervalued tech stocks on sale. First, shares are down about 8% since the beginning of this year. That’s despite the company producing an earnings beat for the second quarter.
Second, the company generates a better-than-average three-year revenue growth rate (per-share basis) of 10.9%. Still, LDOS trades at 0.89x trailing-year sales, below the sector median of 2.3x. Also, it trades at 14.71x forward earnings, ranked favorably below 76% of the competition.
Moreover, options flow data – which features large block trades likely ordered by institutions – shows that last month, traders acquired a significant amount of call options. Finally, analysts peg LDOS as a consensus strong buy. This assessment breaks down as eight buys, two holds and zero sells. As well, the average price target lands at $114.50, implying nearly 19% upside potential. Thus, it’s a great candidate for best bargain tech picks.
Adtran (ADTN)
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A fiber networking and telecommunications firm, Adtran (NASDAQ:ADTN) aligns with an exceptionally relevant industry. According to Grand View Research, the global telecom sector commanded a value of nearly $1.81 trillion in 2022. By 2030, the industry may print revenue of $2.87 trillion. Unfortunately, ADTN ranks among the undervalued tech stocks getting little love. Since the start of the year, shares slipped 57%.
Still, that also means ADTN ranks among tech stocks with reduced prices. Financially, Adtran prints a three-year revenue growth rate of 14.1%, above 76.72% of its peers. However, it’s significantly undervalued against revenue, with a price-to-sales ratio of only 0.46x. Further, throughout this year, institutional players appear to be overall optimistic about ADTN. Through a combination of bought calls and sold puts, traders demonstrate a bullish outlook based on options flow data.
Lastly, analysts peg ADTN as a consensus moderate buy. Their average price target clocks in at $10.33, implying over 28% upside potential. Thus, it makes an interesting case for must-buy discounted tech stocks.
Beam Global (BEEM)
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Based in San Diego, California, Beam Global (NASDAQ:BEEM) focuses on fostering clean mobility. Primarily, Beam provides charging solutions for electric vehicles. As well, it specializes in energy storage facilities and energy security, which involves off-grid energy resilience and emergency preparedness. Although aligned with a critical growth market, BEEM ranks among the undervalued tech stocks on sale.
While the status may have been unwittingly achieved, for speculators, BEEM may be an enticing opportunity. For one thing, shares cratered over 48% since the beginning of the year. Operationally, the company prints a very solid three-year revenue growth rate of 24.7%. Nevertheless, shares trade at 1.97x trailing sales, lower than the sector median of 2.65x.
Though options activity is generally limited for BEEM, since Oct. 2022, large block trades have exclusively been bought calls. This indicates that institutional players are willing to give the green energy specialist a chance. In closing, analysts peg BEEM as a consensus strong buy. Further, their average price target stands at $24, implying nearly 183% upside potential.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
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