June Undervalued Tech Opportunities
The technology sector is generally characterised as full of innovation, competition and growth. It is also known to be highly cyclical and volatile since companies tend to find it difficult to create sustainable competitive advantage and generally rely on discretionary income from consumers. Currently, Network-1 Technologies and Entravision Communications are tech companies I’ve identified as potentially undervalued, meaning their share price is below what these companies are actually worth. Investors can determine how much a cyclical company is worth based on how much money they are expected to make in the future, or compared to the value of their peers. The list I’ve put together below are of stocks that compare favourably on all criteria, which potentially makes them good investments if you believe the price should eventually reflect the stock’s actual value.
Network-1 Technologies, Inc. (AMEX:NTIP)
Network-1 Technologies, Inc. develops, licenses, and protects intellectual property assets. The company was established in 1990 and with the market cap of USD $67.62M, it falls under the small-cap group.
NTIP’s shares are currently hovering at around -92% beneath its value of $33.96, at a price tag of US$2.85, according to my discounted cash flow model. This mismatch indicates a chance to invest in NTIP at a discounted price. In addition to this, NTIP’s PE ratio stands at around 6.55x against its its Communications peer level of, 30x implying that relative to its peers, NTIP’s shares can be purchased for a lower price. NTIP is also a financially robust company, as current assets can cover liabilities in the near term and over the long run. NTIP has zero debt on its books as well, meaning it has no long term debt obligations to worry about. Interested in Network-1 Technologies? Find out more here.
Entravision Communications Corporation (NYSE:EVC)
Entravision Communications Corporation operates as a media company that reaches and engages Hispanics across media channels and advertising platforms primarily in the United States, Spain, Mexico, Argentina, and other Latin America countries. Formed in 1996, and now led by CEO Walter Ulloa, the company size now stands at 1,259 people and with the company’s market cap sitting at USD $364.18M, it falls under the small-cap stocks category.
EVC’s shares are now trading at -87% under its value of $31.61, at a price tag of US$4.10, based on my discounted cash flow model. This difference in price and value gives us a chance to buy low. What’s even more appeal is that EVC’s PE ratio stands at 2.15x against its its Media peer level of, 15.1x meaning that relative to its competitors, EVC’s shares can be purchased for a lower price. EVC is also robust in terms of financial health, as short-term assets amply cover upcoming and long-term liabilities. The stock’s debt-to-equity ratio of 86.62% has been falling over the past couple of years signalling its ability to reduce its debt obligations year on year. Continue research on Entravision Communications here.
Entercom Communications Corp. (NYSE:ETM)
Entercom Communications Corp. operates as a radio broadcasting company in the United States. Formed in 1968, and run by CEO David Field, the company provides employment to 6,052 people and with the stock’s market cap sitting at USD $904.12M, it comes under the small-cap category.
ETM’s stock is now floating at around -50% beneath its intrinsic value of $12.7, at a price tag of US$6.40, based on its expected future cash flows. The divergence signals an opportunity to buy ETM shares at a low price. Additionally, ETM’s PE ratio stands at 2.16x against its its Media peer level of, 15.1x implying that relative to its competitors, ETM’s shares can be purchased for a lower price. ETM is also strong in terms of its financial health, with current assets covering liabilities in the near term and over the long run. The stock’s debt-to-equity ratio of 107.73% has been dropping over time, signalling ETM’s ability to reduce its debt obligations year on year. More detail on Entercom Communications here.
For more financially sound, undervalued companies to add to your portfolio, explore this interactive list of undervalued stocks.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
