At Zacks, we try to avoid labeling stocks as “cheap” or “expensive.” Instead, we opt to look beyond a stock’s face value, and our system puts an emphasis on earnings estimate revisions to find stocks that will hopefully be winners for investors.
With that said, low-priced stocks can still be attractive to investors as they present the chance to take a larger position in a company, which they might not be able to in higher-priced stocks.
When searching for these low-priced stocks, we still look for similar trends in growth, value, and momentum. Then we apply the Zacks Rank to properly analyze the potential that these companies have. We are also aware of the latest sector trends and make sure to cover all of the hottest industries.
Today we’ve highlighted three stocks that fall into the broad “technology” sector. Each of these three stocks is currently trading for less than $10 a share and holds a Zacks Rank #1 (Strong Buy) or #2 (Buy) at the moment.
1. Avid Technology, Inc. (AVID)
Prior Close: $9.30 USD
Avid is a multimedia technology firm that specializes in digital audio and video editing software, including ProTools and MediaComposer. Some of the biggest and most popular movies and music in the world were made and edited on Avid’s software, which competes with offerings from the likes of Apple AAPL and Adobe ADBE. Avid just reported its first-quarter fiscal 2019 financial results on Monday, May 6. The firm’s revenue jumped 5%, while operating expenses fell 5%. Meanwhile, Avid’s adjusted quarterly earnings soared from a loss of $0.06 per share in the year-ago period to positive $0.11 in Q1.
Both Avid’s top and bottom-line results beat our Zacks Consensus Estimates. Looking ahead, the company’s adjusted full-year 2019 earnings are projected to soar 148% on the back of 3% revenue growth. The Burlington Massachusetts-based firm also currently boasts a price/sales ratio of 0.93. This marks an impressive discount compared to its industry’s 4.1 average, which includes peers such as Progress Software Corporation PRGS and MicroStrategy Incorporated MSTR. Avid is currently a Zacks Rank #1 (Strong Buy) and rocks “A” grades for both Value and Growth in our Style Scores system. Shares of Avid have also soared 115% in 2019 as they race out of the under $10 range.
2. NeoPhotonics Corporation (NPTN)
Prior Close: $6.41 USD
NeoPhotonics makes components for high-speed communications networks and is coming off a worse-than-projected Q1 2019 on both the top and bottom lines. Shares of NPTN slipped following its recent earnings release, with NeoPhotonics stock now up roughly 5% over the last 12 months. Despite the San Jose, California-based company’s recent stock price movement, its outlook appears strong as it races toward positive earnings.
Our Zacks Consensus Estimates call for NeoPhotonics’ adjusted full-year 2019 earnings to surge over 93% from a loss of $0.45 per share in the year-ago period to a loss of just $0.03 on the back of nearly 12% revenue expansion. Peeking even further ahead, the company’s 2020 EPS figure is expected to skyrocket well over 1,000% above our 2019 estimate to reach $0.33 per share on 14% sales growth. Investors should also note that NPTN’s price/sales ratio rests at 0.89, which easily marks a discount compared to its industry’s 2.76 and peers such as Marvell Technology MRVL. NeoPhotonics is currently a Zacks Rank #2 (Buy) that sports a “B” grade for Momentum.
3. EXFO Inc. (EXFO)
Prior Close: $4.49 USD
EXFO offers test, monitoring, and analytics for fixed and mobile network operators, webscale companies, and equipment manufacturers. Shares of EXFO have soared 60% in 2019, and the company just recently saw its Q2 fiscal 2019 revenue jump 14.2% to reach $73.9 million. Looking ahead, the communications company’s adjusted current-quarter earnings are projected to soar 600% from a loss in the year-ago period to earnings of $0.05 per share. On top of that, EXFO’s adjusted full-year earnings are projected to surge 133% from $0.09 per share in fiscal 2018 to $0.21 this year, on over 8% revenue growth.
EXFO has also seen its longer-term earnings estimate revision activity turn more positive recently. This helps EXFO earn a Zacks Rank #1 (Strong Buy) right now. The company also boasts “A” grades for Value and Growth in our Style Scores system. Meanwhile, EXFO’s price/sales ratio sits at 0.87 at the moment, which marks a discount compared to its industry’s 1.3. Furthermore, the company’s forward P/E of 21.9X falls below the Communication – Components’ 25.6X average.
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Marvell Technology Group Ltd. (MRVL) : Free Stock Analysis Report
NeoPhotonics Corporation (NPTN) : Free Stock Analysis Report
EXFO Inc (EXFO) : Free Stock Analysis Report
Apple Inc. (AAPL) : Free Stock Analysis Report
MicroStrategy Incorporated (MSTR) : Free Stock Analysis Report
Adobe Systems Incorporated (ADBE) : Free Stock Analysis Report
Progress Software Corporation (PRGS) : Free Stock Analysis Report
Avid Technology, Inc. (AVID) : Free Stock Analysis Report
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