If you’re looking for upside potential, you’ve come to the right place with tech stocks to buy. And if you’re looking for significant returns, you should consider the innovation sector’s discount bin.
I don’t consider the last phrase to be a pejorative term. Rather, I look at it as receiving a 50% off coupon for a famous Italian designer. Of course, I’d take that deal. We’re not just talking about a discount at a hole-in-the-wall big-box retailer. No, we’re talking about compelling tech enterprises that just happen to be trading below key fundamental metrics.
In other words, innovators provide a solid framework for possible robust returns. But discounted innovators? That’s even better. Here are several discounted tech stocks to buy.
GoDaddy (GDDY)
A quirky idea within the technology realm, GoDaddy (NYSE:GDDY) in technical terms operates under the software infrastructure ecosystem. In reality, we know GoDaddy as one of the top website and e-commerce platform builders. Not only that, it’s easily one of the tech stocks to buy. For one thing, just look at its year-to-date performance of up 22%.
Fundamentally, I’m excited about GoDaddy because of the burgeoning gig economy. According to one projection, this sector could be worth nearly $93 billion by 2031. That would imply a compound annual growth rate of 20% from 2021. No wonder analysts are looking at GDDY as a consensus moderate buy. While the average price target of $131 is modest, it could potentially rise to the high-side estimate of $150.
One just needs to look at the company’s outstanding fourth-quarter earnings report, where it posted earnings per share of $7.85. Back then, experts were only projecting EPS of $1.04. For the current fiscal year, they’re looking at revenue of $4.52 billion. If so, that’s a growth rate of 6.3% from last year’s print of $4.25 billion.
Again, because of the gig economy, I believe it’s a do-able target.
TE Connectivity (TEL)
Operating under the electronic components segment, TE Connectivity (NYSE:TEL) manufactures and sells connectivity and sensor solutions in Europe, the Middle East, Africa, the Asia Pacific and the Americas. Moreover, the company operates under three segments: Transportation Solutions, Industrial Solutions and Communications Solutions. By providing myriad critical services, TE should remain relevant amid various market challenges.
To be sure, TEL isn’t exactly the sexiest idea among tech stocks to buy. However, it’s very consistent and reliable. Last fiscal year, the company posted an average positive earnings surprise of 4.93%. It beat quarterly EPS targets all four times. For the current fiscal year, analysts are looking for EPS to land at $7.58. If so, that would be a significant improvement over last year’s result of $6.74.
In fairness, experts are only anticipating very modest growth in the top line at $16.12 billion. Last year, the company posted $16.03 billion. However, it’s also important to note that TE Connectivity provides a forward dividend yield of 1.8%. Thus, it provides a nice balance for tech stocks to buy.
International Money Express (IMXI)
Based in Miami, Florida, International Money Express (NASDAQ:IMXI) conducts business in the software infrastructure space. Together with its subsidiaries, International Money operates as an omnichannel money remittance services company in the U.S. and many other global regions. Since the start of the year, IMXI gained a bit over 2%. In the past 52 weeks, it’s down almost 10%.
Granted, the enterprise ranks among the riskier ideas for tech stocks to buy. However, the global remittance market may reach a valuation of $1.031 trillion by 2029. If so, that would represent a CAGR of 5.78% from 2023. Should International Money grab a piece of the pie, it could rise higher.
To be sure, the company incurred some rough performances, including a disappointing Q2 print. However, overall, the average positive earnings surprise in fiscal 2023 came out to 3.4%. For fiscal 2024, analysts are looking for EPS of $2.19 on revenue of $691.17 million. Both stats represent an improvement over last year’s print of $1.95 EPS on sales of $658.74 million.
Notably, IMXI trades at only 10.19X forward earnings, making it an intriguing idea for undervalued tech stocks to buy.
STMicroelectronics (STM)
Doing business in the semiconductor sector, STMicroelectronics (NYSE:STM) designs, develops, manufactures and sells specialized computer chip products worldwide. In particular, it has gained a strong reputation for its automotive integrated circuits (ICs), along with discrete and power transistor products. With the broader mobility space undergoing significant advancements, STM stock could potentially enjoy downwind benefits.
Fundamentally, what I appreciate about ST is that it represents a tech stagehand. It’s not the main attraction, to be blunt. However, it’s vital for running the show smoothly. Even better, it has the fiscal chops to hang with the big dogs. Aside from a bum note in Q2 last year, it performed well in fiscal 2023. Its average positive earnings surprise came out to 8.9%.
For fiscal 2024, analysts are looking for sales of $16.15 billion. Admittedly, that’s off from last year’s haul of $17.29 billion. The recovery might not come until fiscal 2025, when sales could hit $17.48 billion. However, I believe ST has the chance to surprise. Therefore, its trailing-year revenue multiple of 2.31X looks very attractive. It’s one of the discounted tech stocks to buy.
Tower Semiconductor (TSEM)
An independent semiconductor foundry, Tower Semiconductor (NASDAQ:TSEM) focuses on specialty process technologies to manufacture analog intensive mixed-signal semiconductor devices in Israel, the United States, Japan, Europe and internationally. It provides a wealth of customizable process technologies, including CMOS image sensors and integrated power management solutions. Since the start of the year, TSEM stock gained almost 8%.
One of the fundamental factors supporting Tower is the aforementioned stagehand narrative. Again, it’s not the headline act. However, without foundries, the broader tech space wouldn’t be going anywhere anytime soon. Having said that, TSEM presents a higher risk profile. For example, in the first half of 2023, the company’s average earnings surprise was nearly 16% below breakeven.
However, it turned this narrative around in the second half, with the metric improving to nearly 7% up. Nevertheless, experts anticipate headwinds ahead, with fiscal 2024 revenue potentially falling 1% below last year’s print of $1.42 billion.
Still, experts are projecting a share price of $38.67, implying over 18% upside. Combined with a modest 2.55X trailing-year sales multiple, TSEM is one of the discounted tech stocks to buy.
Gen Digital (GEN)
Operating under the infrastructure software category, Gen Digital (NASDAQ:GEN) provides cybersecurity solutions for consumers in the U.S., Canada and other global regions. Per its corporate profile, Gen Digital offers security and performance products that provide real-time protection for PCs, Macs and mobile devices against malware, viruses, adware and other online threats.
To note, Gen Digital owns the Norton and LifeLock brands. That could be huge given the rising threat of nefarious online activities. Frankly, it’s not just about the cybersecurity risks, which are plentiful and include artificial intelligence used for illicit purposes. Rather, the scams out there are becoming increasingly clever. Even the smartest individuals can fall prey, necessitating a protective platform.
While GEN is down 3% for the year, it’s up more than 28% over the past 52 weeks. With the threat profile only expanding, analysts project fiscal 2024 EPS to hit $1.95 on revenue of $3.81 billion. Last year, the print came out to an EPS of $1.81 on sales of $3.34 billion.
Interestingly, GEN is trading for a lowly forward earnings multiple of 9.67X. Arguably, this makes it a very strong candidate for undervalued tech stocks to buy.
ON Semiconductor (ON)
Operating obviously under its namesake category, ON Semiconductor (NASDAQ:ON) provides intelligent sensing and power solutions in the U.S. and internationally. The company operates through Power Solutions Group, Advanced Solutions Group and Intelligent Sensing Group. It offers critical solutions for multiple industries, including automotive (electric vehicles) and sustainable energy. However, it’s a riskier idea among discounted tech stocks to buy.
Since the beginning of the year, ON stock dropped almost 15%. Over the past 52 weeks, it slipped 8%. However, if you have a long-term view, ON may be seen as a currently underappreciated gem. Should the tech space experience a bounce back (a not-impossible projection given the strength of the labor market), ON could be due for a recovery.
Last year, the company’s average positive earnings surprise clocked in at 6.53%. However, due to anticipated difficulties in the innovation space, Wall Street believes a growth decline in earnings and revenue is likely.
Nevertheless, analysts overall rate shares a moderate buy with a $121.16 price target. Combined with a modest forward earnings multiple of 16.5X, ON is one of the discounted tech stocks to buy.
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.
