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Growth investments can really pay off if you know where to look. Technology is a popular sector for growth investors, and the field continues to accelerate faster than ever before. If you invest right, you stand to make a nice profit. Tech companies will continue to change and reshape our world as the years pass. You don’t want to be left behind, so make sure you’re investing in quality tech stocks that aren’t overpriced.
A great way to find out if the price is right is by identifying companies with low price-to-earnings ratios relative to the growth expected of them over the next three to five years. There is a metric for this, known as the PEG ratio.
Many tech companies have inflated PE ratios, and this is because they have high earnings growth expectations. The PEG ratio helps to put growth stocks into perspective, and they help with assessing the value present in a company based on expected growth. A PEG under 1 may suggest that a stock is undervalued, so tech companies with a low PEG may stand to see superior returns over the long run. If you are a believer in the power of technology, you won’t want to overlook these five buy-ranked tech stocks.
TDK Corp. has an array of technologies for its businesses involving electronic materials, components and devices, semiconductors, recording media, and data storage devices. TDK’s stock is a Zacks Rank #1 (Strong Buy) and it has a PEG of 0.27. With such a low PEG, it’s no wonder why this stock gets an “A” for value in our Style Scores.
Tessera Technologies develops semiconductor packaging technologies to meet the demands for miniaturization and increased performance of electronic products. Tessera is a Zacks Rank #2 (Buy), and it has a PEG of 0.76. Remember, a PEG under 1 may suggest that there is value present. TSRA doles out a 2.48% dividend, and it also has a score of “B” for growth and value in our Style Scores.
Sanmina Corporation engages in providing electronics contract manufacturing services. It focuses on engineering and fabricating complex components and also on providing complete end-to-end supply chain solutions to OEMs. SANM stock is a Zacks Rank #1 (Strong Buy), and for good reason. After all, the company has a VGM score of “A”. This is really great to see, as the VGM is a great indicator for how well-rounded a stock is with regards to growth, value, and momentum metrics. Sanmina’s PEG of just 0.68 should help to justify its case as a potential bargain opportunity relative to expected earnings growth the long run.
KLA-Tencor is a leading supplier of process control and yield management solutions for the semiconductor and related microelectronics industries. It has a comprehensive range of software, products, services, and expertise which help design integrated circuit manufacturers manage yield throughout the entire wafer fabrication process. KLA-Tencor is a Zacks Rank #1 (Strong Buy), and it has a PEG of 0.79. It’s worth noting that the company doles out a 2.86% dividend to shareholders. KLAC is a big player in its industry, so it makes sense for the company to have a hefty market cap of $11.32 billion.
ARRIS is an IP, video and broadband technology company. It offers video infrastructure, delivery networks, home and business connectivity, devices, and other related products. ARRS is a Zacks Rank #2 (Buy). The company trades at a forward PE of just 9.83, and it also has a PEG of just 0.49. It’s no wonder why this stock gets an “A” for value in our Style Scores.
Many argue that valuations in the tech market are inflated. While there is merit to that argument, one cannot deny the fact that there are still cheap tech stocks out there. Fundamental metrics such as the PEG ratio will help you to determine how a stock’s current price is related to earnings growth expectations over the long run. It is a valuable tool for Wall Street, and it can also be helpful to every day investors like you.
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5 Tech Stocks to Buy and Hold for the Long Run
Growth investments can really pay off if you know where to look. Technology is a popular sector for growth investors, and the field continues to accelerate faster than ever before. If you invest right, you stand to make a nice profit. Tech companies will continue to change and reshape our world as the years pass. You don’t want to be left behind, so make sure you’re investing in quality tech stocks that aren’t overpriced.
A great way to find out if the price is right is by identifying companies with low price-to-earnings ratios relative to the growth expected of them over the next three to five years. There is a metric for this, known as the PEG ratio.
Many tech companies have inflated PE ratios, and this is because they have high earnings growth expectations. The PEG ratio helps to put growth stocks into perspective, and they help with assessing the value present in a company based on expected growth. A PEG under 1 may suggest that a stock is undervalued, so tech companies with a low PEG may stand to see superior returns over the long run. If you are a believer in the power of technology, you won’t want to overlook these five buy-ranked tech stocks.
TDK Corporation-(TTDKY - Free Report)
TDK Corp. has an array of technologies for its businesses involving electronic materials, components and devices, semiconductors, recording media, and data storage devices. TDK’s stock is a Zacks Rank #1 (Strong Buy) and it has a PEG of 0.27. With such a low PEG, it’s no wonder why this stock gets an “A” for value in our Style Scores.
TDK CORP-ADS EPS Diluted (Quarterly)
TDK CORP-ADS EPS Diluted (Quarterly) | TDK CORP-ADS Quote
Tessera Technologies Inc-
Tessera Technologies develops semiconductor packaging technologies to meet the demands for miniaturization and increased performance of electronic products. Tessera is a Zacks Rank #2 (Buy), and it has a PEG of 0.76. Remember, a PEG under 1 may suggest that there is value present. TSRA doles out a 2.48% dividend, and it also has a score of “B” for growth and value in our Style Scores.
TESSERA TEC INC EPS Diluted (TTM)
TESSERA TEC INC EPS Diluted (TTM) | TESSERA TEC INC Quote
Sanmina Corporation-(SANM - Free Report)
Sanmina Corporation engages in providing electronics contract manufacturing services. It focuses on engineering and fabricating complex components and also on providing complete end-to-end supply chain solutions to OEMs. SANM stock is a Zacks Rank #1 (Strong Buy), and for good reason. After all, the company has a VGM score of “A”. This is really great to see, as the VGM is a great indicator for how well-rounded a stock is with regards to growth, value, and momentum metrics. Sanmina’s PEG of just 0.68 should help to justify its case as a potential bargain opportunity relative to expected earnings growth the long run.
SANMINA CORP Market Cap
SANMINA CORP Market Cap | SANMINA CORP Quote
KLA-Tencor Corporation-(KLAC - Free Report)
KLA-Tencor is a leading supplier of process control and yield management solutions for the semiconductor and related microelectronics industries. It has a comprehensive range of software, products, services, and expertise which help design integrated circuit manufacturers manage yield throughout the entire wafer fabrication process. KLA-Tencor is a Zacks Rank #1 (Strong Buy), and it has a PEG of 0.79. It’s worth noting that the company doles out a 2.86% dividend to shareholders. KLAC is a big player in its industry, so it makes sense for the company to have a hefty market cap of $11.32 billion.
KLA-TENCOR CORP 12 Month EPS
KLA-TENCOR CORP 12 Month EPS | KLA-TENCOR CORP Quote
ARRIS International Plc-
ARRIS is an IP, video and broadband technology company. It offers video infrastructure, delivery networks, home and business connectivity, devices, and other related products. ARRS is a Zacks Rank #2 (Buy). The company trades at a forward PE of just 9.83, and it also has a PEG of just 0.49. It’s no wonder why this stock gets an “A” for value in our Style Scores.
ARRIS INTL PLC 12 Month EPS
ARRIS INTL PLC 12 Month EPS | ARRIS INTL PLC Quote
Bottom Line
Many argue that valuations in the tech market are inflated. While there is merit to that argument, one cannot deny the fact that there are still cheap tech stocks out there. Fundamental metrics such as the PEG ratio will help you to determine how a stock’s current price is related to earnings growth expectations over the long run. It is a valuable tool for Wall Street, and it can also be helpful to every day investors like you.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>