Here at Zacks, we don’t generally classify stocks as “cheap” or “expensive”, and rather than looking at the stock’s face value, we have a system that puts an emphasis on earnings estimate revisions to find stocks that will hopefully be winners for investors.
That being said, low-priced stocks can be attractive to smaller investors that can’t necessarily afford large stakes in companies with higher priced stocks.
When looking at these low-priced stocks, we can look at the same trends in growth, value, and momentum and apply the Zacks Rank to properly analyze the potential that these companies have. We are also keenly 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 per share and holds a Zacks Rank #2 (Buy) or better. Take a look at the strong estimate revision activity and other factors that make these tech companies stick out right now:
1. BlackBerry Limited (BB)
Prior Close: $9.93
BlackBerry is best known to the public for its once-iconic brand of smartphones, but the company ditched hardware manufacturing recently and now serves as an enterprise software and services company. The new BlackBerry’s claim to fame is its security software, which is on track to be a major option in the budding self-driving car market.
BB is a Zacks Rank #1 (Strong Buy). A struggle to meet expectations on high valuations has hurt the stock this year, but BlackBerry looks to have found a bottom and could very well be poised to rebound as earnings estimates move higher.
The company has witnessed three positive revisions to its full-year EPS estimates within the past 30 days. Analysts are now expecting earnings to be six cents higher than estimates suggested just a month ago. This positive analyst sentiment should help lift shares if the positive trend holds.
2. Avid Technology, Inc. (AVID)
Prior Close: $5.78
Avid develops and sells a portfolio of software products used to create digital media content, including professionally-used music and video creation solutions. The stock is currently sporting a Zacks Rank #2 (Buy). AVID shares have surged nearly 28% in the past six months, which might make the stock an interesting momentum play, but valuations still look attractive at their current levels.
Near-term earnings look shaky and caused AVID’s P/E to become stretched, but other measures of value look sharp. For instance, the stock has a P/S ratio of 0.6, which is a steep discount to the industry average. Investors often prefer to look at this revenue-based value indicator when considering smaller software firms.
3. Photronics, Inc. (PLAB)
Prior Close: $9.23
Photronics is of one the world’s leading producers of photomasks, which are high-precision quartz plates that contain images of electronic circuits. These photomasks are a piece in the production of computer semiconductors and flat-panel displays. Photronics currently holds a Zacks Rank #1 (Strong Buy) and an “A” grade in the Value category of our Style Scores system.
PLAB is trading at just 15.8x forward earnings. It has a PEG ratio of 1.6, so investors are getting its near-term EPS growth outlook at a nice price. For the current year, that growth is expected to be a staggering 210%. In the long-term, Photronics is expected to see an annualized earnings growth rate of 10%.
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