Tech stocks have long been the darlings of the investment world.
But recent shifts in market dynamics have brought several to trade at what can only be described as deep discounts. Despite the sector’s dazzling rally in 2023, driven by groundbreaking advances in technologies like generative artificial intelligence (AI), some tech stocks still remain undervalued. These anomalies present a unique opportunity for discerning investors ready to capitalize on prices that might not stay low for long.
As we navigate through 2024, several factors hint at a continued upward trajectory for the tech industry. Innovations in AI, ongoing digital transformation across industries and an easing of the aggressive rate hikes that previously dampened market enthusiasm all contribute to a fertile ground for growth.
Investors looking for potential high-return investments should consider tech stocks that are currently trading below their intrinsic value. Yet, such stocks are not likely to remain at these levels. More investors recognize their potential and act to correct the market’s short-term oversights. Hence, these three tech stocks are trading at deep discounts and providing a prime buying opportunity.
Opera (OPRA)
Opera (NASDAQ:OPRA) is a lesser-known player in the tech industry. Unlike its larger competitors, Opera has carved out a niche with innovative features and strategic expansions that promise substantial growth.
With a focus on specialized browsers like Opera GX, designed for gamers, Opera has tapped into a vibrant and growing market. Opera GX offers features such as CPU and RAM limiters, which enhance gaming performance, and integrations with Twitch. This makes it a standout choice for its target demographic.
Financially, Opera has demonstrated robust performance with a consistent increase in average revenue per user (ARPU). During Q1 of 2024, the company’s revenue and EBITDA exceeded the guidance provided by the management during the previous quarter.
Opera’s investment in an AI data center in Iceland, utilizing clean and cost-effective energy sources, positions it at the forefront of the AI revolution in web browsing. This forward-thinking approach aligns with global sustainability trends. Further, it is enhancing the company’s appeal to environmentally conscious investors.
Opera’s current valuation, below industry averages despite its growth trajectory, suggests that the stock is undervalued. The company is trading at a forward P/E of 18.9x, significantly below the sector median of 29.8x.
Photronics (PLAB)
Photronics (NASDAQ:PLAB) is a key player in the photomask industry. The company faced a challenging Q2 of fiscal 2024, missing both top and bottom-line expectations set by analysts. Despite these setbacks, the company’s strategic responses and market position provide hope for long-term growth.
Despite the Q2 setbacks, Photronics’ management remains optimistic about the upcoming quarters. The company is well-prepared to meet increasing demand, especially with the semiconductor industry’s gradual recovery. Photronics expects its revenue growth to pick up through 2024 and into 2025, driven by strong fundamentals in the semiconductor sector and increasing demand for its high-precision photomasks.
Photronics’ commitment to capital expenditures, maintaining a $140 million budget for the year, demonstrates its focus on long-term growth and technological leadership. The company’s investment in state-of-the-art equipment and its quick recovery from production disruptions are indicative of a resilient operational model.
Photronics boasts a robust financial structure, underscored by significant cash reserves and a conservative debt profile. The company’s stock is currently at a forward P/E of 11.8x. This is a deep discount compared to the sector median of 29.8x.
ACM Research (ACMR)
ACM Research (NASDAQ:ACMR) specializes in developing and manufacturing single-wafer wet cleaning equipment. As the industry seeks higher yields and efficiency, ACM Research’s innovative solutions offer compelling advantages over traditional methods.
ACM Research reported robust revenue growth in its recent quarterly earnings, with a notable increase from the previous year. The company’s revenue is predominantly generated from Mainland China, tapping into the world’s largest semiconductor market.
The company continues to innovate across its product lines. ACM Research holds several patents that bolster its competitive edge, including multi-zone anodes and vacuum pre-wetting of wafers, which are crucial for high-end semiconductor manufacturing.
ACM Research’s financial stability is reflected in its compelling valuation metrics. With a forward P/E ratio of 18.5x, below the industry mean of 29.8x, and a forward EV/EBITDA multiple of 10.7x compared to an industry average of 14.5x, the company presents an undervalued proposition relative to its peers.
On the date of publication, Mohammed Saqib did not hold (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.
