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4 Undervalued Tech Stocks to Buy on Market Recovery Optimism
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The broader equity market has remained in the positive trajectory so far in 2023, with the major stock indexes, Dow Jones Industrial Average, Nasdaq Composite and S&P 500, jumping 3.5%, 5.9% and 4.2%, respectively, year to date.
Though the fears of recession have not subsided, cooling inflationary pressure and declining gasoline prices have given a boost to investor sentiment lately. The University of Michigan's preliminary reading for one-year inflation dropped to 4% in January 2023 from 4.4% in December 2022. The survey also suggests that this was the lowest reading since April 2021.
A slowdown in inflation is also giving confidence that the Federal Reserve may go slow in its pace of interest rate hikes. Notably, the central bank raised federal fund rates seven times in 2022. The current fed rate now sits at a range of 4.25-4.50%.
Therefore, if the inflationary pressure and gasoline prices continue to ease, we may hope for a further rebound in the broader equity market. Amid the current macroeconomic environment, one should look for undervalued stocks with bright growth prospects. If the market shoots up, these stocks have increased chances of registering higher gains. This implies that undervalued stocks cushion investors from market jitters, while companies’ robust fundamentals ensure solid portfolio returns.
However, it is difficult to pick such multi-faceted stocks from a plethora of investment opportunities.
Here the Zacks Style Score comes in handy. The Value Style Score will help us filter stocks that are undervalued, while our Growth Style Score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth.
With the help of Zacks Stock Screener, we have zeroed in on four tech stocks — Jabil (JBL - Free Report) , Cirrus Logic (CRUS - Free Report) Asure Software (ASUR - Free Report) and Brightcove (BCOV - Free Report) — which look promising based on their encouraging Zacks Rank, and favorable Value and Growth style scores.
These stocks have a favorable combination of a Growth and Value Score of A or B and a Zacks Rank #1 (Strong Buy) or #2 (Buy). Stocks with such a favorable combination offer solid investment opportunities.
Our Picks
Jabil – The company currently sports a Zacks Rank #1 and has a Growth and Value Score of B and A, respectively. The Zacks Consensus Estimate for fiscal 2023 earnings has been revised upward by 13 cents to $8.31 per share over the past 30 days, indicating a year-over-year increase of 8.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Jabil is benefiting from strong demand in key end markets, courtesy of its operational execution and skillful management of supply chain dynamics. It is likely to witness healthy top-line growth owing to secular tailwinds in healthcare, automotive, industrial, 5G and cloud businesses.
Jabil’s focus on end market and product diversification is a key catalyst. Its Photonics business unit and EFFECT Photonics have joined forces to develop next-generation coherent optical modules, which will likely drive top-line expansion.
Cirrus Logic – This Zacks Rank #2 stock has a Growth Score of A and a Value Score of B. The Zacks Consensus Estimate for the company’s fiscal 2023 earnings has been revised southward by 3 cents to $5.91 per share over the past seven days, indicating a year-over-year decrease of 14.4%.
Cirrus Logic’s performance is benefiting from continued momentum across its high-performance mixed-signal and audio segments. The company plans to expand its product line by investing in next-generation technology like wearables, gaming and AR/VR. It also plans to develop a 22-nanometer smart codec and custom-boosted amplifier to expand its footprint in the audio market.
Cirrus Logic expects its SAM (software asset management) to cross $1 billion by 2026. Increased adoption of camera controllers is a tailwind. A strong balance sheet with no long-term debt is a positive. The company’s share repurchase policy is also noteworthy.
Asure Software – It has a Growth and Value Score of B. The Zacks Consensus Estimate for this Zacks Rank #2 company’s fiscal 2023 earnings has been revised 6 cents northward to 28 cents per share over the past 90 days, indicating a year-over-year increase of 292.9%.
It is a cloud computing firm that offers business clients the chance to modernize everything from human capital management (HCM) and time & attendance solutions to payroll and taxes. Asure Software’s strategic initiative to become a pure software-as-a-service HCM company is aiding its top-line growth. The company’s focus on driving innovation for its HCM solutions is helping it expand its footprint in the HCM market.
New client additions and continued focus on cross-selling to existing clients are driving Asure Software’s revenues. The company’s differentiated employee strategy, measurement capabilities and comprehensive product offerings are helping it win new customers.
Brightcove – This Boston, MA-based company provides cloud-based services for video. Its flagship product is Video Cloud, an online video platform that enables customers to publish and distribute video to Internet-connected devices.
Brightcove is benefiting from increased video adoption across media and enterprise customers. The company’s over-the-top solution, Beacon, has witnessed significant adoption in recent quarters.
The company carries a Zacks Rank #2 and has a Growth and Value Score of B. The Zacks Consensus Estimate for 2023 earnings has remained unchanged at 16 cents per share over the past 60 days.
Image: Bigstock
4 Undervalued Tech Stocks to Buy on Market Recovery Optimism
The broader equity market has remained in the positive trajectory so far in 2023, with the major stock indexes, Dow Jones Industrial Average, Nasdaq Composite and S&P 500, jumping 3.5%, 5.9% and 4.2%, respectively, year to date.
Though the fears of recession have not subsided, cooling inflationary pressure and declining gasoline prices have given a boost to investor sentiment lately. The University of Michigan's preliminary reading for one-year inflation dropped to 4% in January 2023 from 4.4% in December 2022. The survey also suggests that this was the lowest reading since April 2021.
A slowdown in inflation is also giving confidence that the Federal Reserve may go slow in its pace of interest rate hikes. Notably, the central bank raised federal fund rates seven times in 2022. The current fed rate now sits at a range of 4.25-4.50%.
Therefore, if the inflationary pressure and gasoline prices continue to ease, we may hope for a further rebound in the broader equity market. Amid the current macroeconomic environment, one should look for undervalued stocks with bright growth prospects. If the market shoots up, these stocks have increased chances of registering higher gains. This implies that undervalued stocks cushion investors from market jitters, while companies’ robust fundamentals ensure solid portfolio returns.
However, it is difficult to pick such multi-faceted stocks from a plethora of investment opportunities.
Here the Zacks Style Score comes in handy. The Value Style Score will help us filter stocks that are undervalued, while our Growth Style Score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth.
With the help of Zacks Stock Screener, we have zeroed in on four tech stocks — Jabil (JBL - Free Report) , Cirrus Logic (CRUS - Free Report) Asure Software (ASUR - Free Report) and Brightcove (BCOV - Free Report) — which look promising based on their encouraging Zacks Rank, and favorable Value and Growth style scores.
These stocks have a favorable combination of a Growth and Value Score of A or B and a Zacks Rank #1 (Strong Buy) or #2 (Buy). Stocks with such a favorable combination offer solid investment opportunities.
Our Picks
Jabil – The company currently sports a Zacks Rank #1 and has a Growth and Value Score of B and A, respectively. The Zacks Consensus Estimate for fiscal 2023 earnings has been revised upward by 13 cents to $8.31 per share over the past 30 days, indicating a year-over-year increase of 8.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Jabil is benefiting from strong demand in key end markets, courtesy of its operational execution and skillful management of supply chain dynamics. It is likely to witness healthy top-line growth owing to secular tailwinds in healthcare, automotive, industrial, 5G and cloud businesses.
Jabil’s focus on end market and product diversification is a key catalyst. Its Photonics business unit and EFFECT Photonics have joined forces to develop next-generation coherent optical modules, which will likely drive top-line expansion.
Jabil, Inc. Price and Consensus
Jabil, Inc. price-consensus-chart | Jabil, Inc. Quote
Cirrus Logic – This Zacks Rank #2 stock has a Growth Score of A and a Value Score of B. The Zacks Consensus Estimate for the company’s fiscal 2023 earnings has been revised southward by 3 cents to $5.91 per share over the past seven days, indicating a year-over-year decrease of 14.4%.
Cirrus Logic’s performance is benefiting from continued momentum across its high-performance mixed-signal and audio segments. The company plans to expand its product line by investing in next-generation technology like wearables, gaming and AR/VR. It also plans to develop a 22-nanometer smart codec and custom-boosted amplifier to expand its footprint in the audio market.
Cirrus Logic expects its SAM (software asset management) to cross $1 billion by 2026. Increased adoption of camera controllers is a tailwind. A strong balance sheet with no long-term debt is a positive. The company’s share repurchase policy is also noteworthy.
Cirrus Logic, Inc. Price and Consensus
Cirrus Logic, Inc. price-consensus-chart | Cirrus Logic, Inc. Quote
Asure Software – It has a Growth and Value Score of B. The Zacks Consensus Estimate for this Zacks Rank #2 company’s fiscal 2023 earnings has been revised 6 cents northward to 28 cents per share over the past 90 days, indicating a year-over-year increase of 292.9%.
It is a cloud computing firm that offers business clients the chance to modernize everything from human capital management (HCM) and time & attendance solutions to payroll and taxes. Asure Software’s strategic initiative to become a pure software-as-a-service HCM company is aiding its top-line growth. The company’s focus on driving innovation for its HCM solutions is helping it expand its footprint in the HCM market.
New client additions and continued focus on cross-selling to existing clients are driving Asure Software’s revenues. The company’s differentiated employee strategy, measurement capabilities and comprehensive product offerings are helping it win new customers.
Asure Software Inc Price and Consensus
Asure Software Inc price-consensus-chart | Asure Software Inc Quote
Brightcove – This Boston, MA-based company provides cloud-based services for video. Its flagship product is Video Cloud, an online video platform that enables customers to publish and distribute video to Internet-connected devices.
Brightcove is benefiting from increased video adoption across media and enterprise customers. The company’s over-the-top solution, Beacon, has witnessed significant adoption in recent quarters.
The company carries a Zacks Rank #2 and has a Growth and Value Score of B. The Zacks Consensus Estimate for 2023 earnings has remained unchanged at 16 cents per share over the past 60 days.
Brightcove Inc. Price and Consensus
Brightcove Inc. price-consensus-chart | Brightcove Inc. Quote