Blog

5 Cheap Tech Stocks to Buy Before the Next Breakout

Cheap is a relative term, but the bear market of 2022 has certainly made things easier for those looking for cheap tech stocks. The Nasdaq is down 28.2% so far this year, significantly outperforming the S&P 500’s overall decline of 14.6 percent. However, a downturn fueled by technology is not uncommon. Naturally, neither is a tech-driven rebound.

A short-term breakout could occur if the Federal Reserve slows the rate at which it raises interest rates by 50 basis points later this month. More supported potential gain in the tech area ought to result from a further developing economy whenever expansion has been subdued and the Fed begins bringing down rates.

However, investors with a medium- to long-term perspective need not wait for that to occur before beginning to build positions in inexpensive tech stocks. Here are seven that are likely to appreciate and have attractive prices.

5 Differences Between the Cryptocurrency Market and the Stock Market

Cheap Tech Stocks: Alphabet (NASDAQ: GOOGL)

Alphabet (NASDAQ:GOOGL) has suffered as a result of concerns about declining ad revenue in the midst of a recession. Shares are down 31% year to date.

Despite the Street’s disappointment with Alphabet’s third-quarter earnings, the company was still able to increase revenue by 6% year-over-year to $69.1 billion. Additionally, Google Cloud revenue was $6.87 billion, which was slightly higher than anticipated. Nonetheless, greater expenses brought about lower profit and edges.

Alphabet will strategically strengthen its cloud position while maintaining its dominance over search advertising despite the negative effects of the economy on ad sales. It is also likely to start responding to calls to cut costs and staff, as well as

to sell off underperforming bets like Waymo, a company that makes self-driving cars. The company will emerge stronger and leaner if these steps are taken.

Alphabet is a great stock to buy when it’s on sale because of its huge search and advertising revenue moats. Additionally, the fact that it has lost nearly a third of its value this year makes it available for purchase.

Microsoft (MSFT)

 This bear market also offers investors a unique opportunity to acquire Microsoft (NASDAQ: MSFT) is for sale, and the shares have fallen by more than 25% this year. However, a rebound may have already begun. In a little more than a month, MSFT has mobilized 17%.

The company’s fiscal first-quarter earnings were made public at the end of October, prompting a sharp sell-off in the stock. Despite reporting earnings and revenue that were higher than anticipated, guidance was not met. Investors shouldn’t continue to anticipate tech firms experiencing pandemic-level growth, even though concerns about growth have weighed on the stock.

To $50.1 billion, Microsoft’s fiscal Q1 revenue increased 11% year over year and 16% in constant currency. That should not be laughed at. In contrast, the company’s revenue growth rate over the past three years, 17.4%, is higher than that of nearly 73% of its rivals. In addition, the company’s cloud services division is expanding at an impressive rate—it increased by 20% in the most recent quarter when compared to the same period a year earlier and for the first time has exceeded 50% of the company’s total revenue.

The stock is clearly favored by analysts. 48 of the 53 people who write about it give it a “buy” or “overweight” rating, with four “holds” and one “sell” rating. The average target price of $293.06 set by analysts indicates a 17% upside over the next year. Shares ought to rise significantly over the long term.

Cheap Tech Stocks: Applied Materials (AMAT)

Semiconductor stocks have been among the hardest hit, and Applied Materials (NASDAQ: AMAT) is no different. From a historical perspective, the semiconductor manufacturing equipment manufacturer’s shares appear cheap after falling 32% year to date.

This is true despite the fact that the company’s shares have risen 16% in the last month, helped in part by the company’s better-than-anticipated fiscal fourth-quarter results and upbeat guidance for the current quarter. This included record revenue of $6.75 billion for the quarter, up 10% from the previous year. Despite the numerous challenges facing the sector this year, the company also reported record annual revenue of $25.79 billion, an increase of 12 percent.

Management is generally optimistic, despite the company’s warning that U.S. restrictions on chip exports to China may result in missed forecasts. The CHIPS and Science Act should help Applied Materials in the future.

As I said, shares have been on the rise however stay modest. AMAT’s P/E ratio of 14.3 is lower than its 10-year median P/E of 18.2. This is one of the cheapest tech stocks because it pays a dividend, resulting in a yield of 1%.

ON Semiconductor (ON)

ON Semiconductor (NASDAQ: ON) is a rare tech stock because it is the only one that is actually up for the year, having gained 5.4 percent so far in 2222. The company that makes chips for the automotive, communications, computing, consumer, industrial, lighting, medical, and military markets has had four straight quarters of earnings that beat estimates. This strong performance comes on the heels of those quarters.

You might be wondering why ON is included on a list of cheap tech stocks in light of this and the stock’s run of more than 20% in less than a month. Even though the stock appears to be slightly overvalued in comparison to its competitors, it is actually undervalued in comparison to its previous valuation. Shares have a P/E ratio of 18.5 at the moment, compared to a median of 23.7 over the previous ten years.

Additionally, the company’s fundamentals are hard to fault, suggesting that the stock deserves a higher price. ON Semiconductor’s non-GAAP earnings increased 87% year over year to $1.45 per share during the third quarter, while revenue increased 26% to $2.19 billion. Analysts’ estimates were exceeded by both numbers.

As it supplies chips for rapidly expanding sectors with clear, sustained demand, I anticipate ON stock to continue to outperform.

Cheap Tech Stocks: ASML (ASML)

ASML (NASDAQ:ASML) is one of the most important and profitable semiconductor companies in existence. It is one of the few businesses that makes large-scale lithography systems for printing semiconductors.

A projection system that is used to etch blueprints onto chips is called a lithography system. Due to their size and complexity, these systems are pricey. According to Reuters, the purchase price of each machine is approximately $150 million and is as big as a bus. ASML has sold 163 of these systems over the past two quarters.

ASML is a must-have stock because it produces machines that are essential to the semiconductor industry and because of its profitability metrics. With a return on assets of 17.8% and 58.9%, it outperforms its peers by 90% and 88%, respectively.

To date, shares have lost around 25%. In any case, throughout the last month, ASML has shot up 28%. The current share price is 18% higher than the average target price of $708.60 set by analysts.

Copyrights © 2021 ZareTech.