Why These 7 Stocks Are the Best Ways to Play Tech Right Now
With the integration of advanced solutions such as generative artificial intelligence, the best tech stocks to buy have dominated investment-resource-related headlines. However, a common concern currently permeates the digital ecosystem: not wanting to hold the bag.
For example, take a look at the financials for Nvidia (NASDAQ:NVDA). By arguably most measures, NVDA represents a top long-term idea for those investing in tech stocks. Thanks to Nvidia’s graphics processors that empower AI initiatives, shares skyrocketed this year. However, at nearly 207% up for the year, it raises the obvious question, is NVDA (and its ilk) overvalued?
It’s difficult to answer otherwise. Right now, NVDA trades at a trailing multiple of nearly 229X and a forward multiple of almost 58X. Both stats rate as overheated for the industry. Therefore, it makes sense to consider high-return tech stocks that haven’t quite enjoyed Nvidia-magnitude success.
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To be sure, acquiring undervalued enterprises offers no guarantees of upside. Still, some investors may be comforted with top tech stocks that have yet to buy tickets for the hype train.
TD Synnex (SNX)
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A Fortune 200 company, TD Synnex (NYSE:SNX) is a leading provider of a comprehensive range of distribution, systems design, and integration services for the technology industry to a wide range of enterprises. Per its corporate profile, Synnex operates in numerous countries throughout North and South America, Asia-Pacific, and Europe. Since the start of the year, SNX gained just a hair under 1%.
Put another way, Synnex may be one of the best tech stocks to buy primarily because of its relevance. However, it’s also underappreciated since it plays more of a stagehand role rather than an enterprise that commands headlines like Nvidia. Still, with SNX gaining only a bit more than 8% in the trailing 365 days, bag-holding concerns may be minimal.
On a financial note, Synnex prints a three-year revenue growth rate (on a per-share basis) of 20.4%, above 86.46% of its peers. Also, it enjoys consistent profitability, a hallmark of reliable top tech stocks. Lastly, SNX trades at a forward multiple of 9.03. In contrast, the sector median is 17.38X.
LSI Industries (LYTS)
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Based in Cincinnati, Ohio, LSI Industries (NASDAQ:LYTS) is a leading producer of high-performance, American-made lighting solutions. Per its public profile, LSI offers distinct indoor and outdoor products and services, including digital and print graphics capabilities. Its products are used extensively in automotive dealerships, gasoline stations, retail establishments, and sports complexes, to name but a few.
Since the start of the year, LYTS returned its stakeholders a little bit above 1%. To put this figure into context, the benchmark S&P 500 returned nearly 17% during the same period. So, on paper, LYTS doesn’t appear to be moving anywhere. However, the company is quietly printed a three-year revenue growth rate of 8.9%, above 64% of its peers.
Further, the company benefits from a Piotroski F-Score of 7 out of 9, reflecting decent operational efficiency. Also, its Altman Z-Score of 4.24 indicates a low risk of imminent bankruptcy. Finally, the market prices LYTS at a forward multiple of 12.51. In contrast, the sector median is 17.38. Thus, it’s one of the best tech stocks to buy.
DHI Group (DHX)
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A leading provider of career marketplaces for technology professionals across various industries, DHI Group (NYSE:DHX) seeks to empower tech professionals and organizations to compete and win through expert insights and relevant employment connections. Established in 1990, DHI’s ultimate vision centers on matching the highest-quality candidates with the appropriate client career opportunities.
While DHX might not rank as a direct player among the best tech stocks to buy, it’s still worth serious consideration. After all, when it comes to any organization, it’s all about people, people, people. In full disclosure, though, DHX presents high risks. Since the Jan. opener, shares cratered nearly 29%. Still, it might offer an upside for the daring.
Notably, DHI is a growth machine. Last year, the company posted revenue of $149.7 million and net income of $4.2 million. These stats compared favorably to 2021’s sales haul of $119.9 million and a net loss of $29.7 million.
Even with the strong top-line performance, DHX trades at a revenue multiple of 1.09. In contrast, the underlying sector median stands at 2.4X. So, for gamblers of high-return tech stocks, it’s worth a closer examination.
Tower Semiconductor (TSEM)
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Calling Israel home, Tower Semiconductor (NASDAQ:TSEM) is the leader in high-value analog semiconductor foundry solutions. According to its corporate profile, Tower provides technology and manufacturing platforms for integrated circuits (ICs) in growing markets such as consumer, industrial, automotive, mobile, infrastructure, medical and aerospace, and defense. Since the start of the year, TSEM slipped a bit more than 13%.
Nevertheless, Tower could offer one of the best tech stocks to buy for those completely uninterested in acquiring overheated securities. Plus, the company isn’t quite as bad as it may look in the charts. For example, Tower features a cash-to-debt ratio of 3.88, above 61% of its peers. Also, its equity-to-asset ratio clocks in at 0.77, better than 72.1% of sector players.
As well, the company is consistently profitable (especially recently), providing confidence for prospective buyers. If that wasn’t enough, the market prices TSEM at a forward multiple of 18.01. As a discount to projected earnings, Tower ranks better than 67.91% of the competition. If you’re investing in tech stocks but want a solid discount, TSEM should be on your radar.
Magic Software (MGIC)
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Another Israeli company, Magic Software (NASDAQ:MGIC) is a global provider of powerful and versatile end-to-end, on-premises, and cloud-based integration and low-code application development platforms. Per its public profile, Magic commands over 30 years of experience. As well, it features 24 regional offices, millions of installations worldwide, and strategic alliances with global IT leaders.
Since the beginning of this year, MGIC fell more than 20%. In the trailing one-year period, Magic shares tumbled over 31%, meaning that it’s only one of the best tech stocks for speculators. However, it’s specifically for speculators who wish to avoid NVDA-style premiums.
You’re not going to get that with MGIC. According to data from Yahoo Finance, the market prices shares at trailing earnings multiple of 15.65. In contrast, the sector median stat comes in at a much loftier 27.93X. Also, MGIC trades at an enterprise value (EV) to revenue ratio of 1.07X. However, the sector median clocks in at 2.26X.
Lastly, Magic delivers very solid revenue and EBITDA growth over the past three years. Additionally, it’s consistently profitable, making it a worthwhile pick for tech stocks to buy.
Concentrix (CNXC)
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While incredibly risky, Concentrix (NASDAQ:CNXC) makes a case for the best tech stocks for not holding the bag. That’s because those who jumped aboard CNXC earlier this year ended up holding the proverbial carrier. Since the Jan. opener, CNXC fell just over 36%. Interestingly, over the past five years, the security ended up gaining only 6.2%. However, that’s when contrarian ears might perk up.
According to its corporate profile, Concentrix is a leading technology-enabled global business services company specializing in customer engagement and improving business performance for some of the world’s best brands. These include over 95 Global Fortune 500 clients and over 90 global disruptor clients.
On the operational side, Concentrix prints a three-year revenue growth rate of 10.3%, better than 56.42% of its peers. Also, its EBITDA growth rate during the same frame clocks in at 17.8%, above 64.45% of software players. Even better, CNXC trades at a forward multiple of 7.31. As a discount to projected earnings, Concentrix ranks superior to 95.39% of the competition. If you’re looking for a high-growth rebound name, CNXC could rank among the top tech stocks.
KVH Industries (KVHI)
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Another risky idea but compelling idea for the best tech stocks to buy, KVH Industries (NASDAQ:KVHI) is a global leader in mobile connectivity and inertial navigation systems, with innovative technology designed to enable a mobile world. According to management, KVH also represents a premier manufacturer of high-performance sensors and integrated inertial systems for defense and commercial applications. Unfortunately, Wall Street isn’t feeling KVHI right now.
Since the January opener, shares tumbled almost 16%. In the past 60 months, they gave up nearly 34% of equity value. Much of the pain centers on its lackluster revenue performance thus far. For instance, in 2021, sales slipped to $133.9 million, down 15.6% against 2020’s tally. And at $138.9 million, last year’s sales haul wasn’t that much better.
Still, it’s worth giving KVH a shot if you’re a contrarian. Primarily, the company benefits from a robust balance sheet. Its cash-to-debt ratio stands at nearly 39X, ranked better than 87% of its peers. Also, its Piotroski F-Score comes in at 7 out of 9, reflecting decent operational efficiency. Lastly, KVHI trades at a tangible book multiple of 1.09X. In contrast, the sector median stat stands at 2.09X.
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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