Today’s tech sector is not known for providing numerous opportunities for value investors, as traditional valuation metrics have been replaced with anticipation for the future. Of course, there are still plenty of undervalued tech stocks—as long as you know the right places to look.
For one, value investors will want to stick to stocks with strong Zacks Ranks. The Zacks Rank emphasizes earnings estimates and earnings estimate revisions, so it is independent of many classic valuation figures, but our proven system has more than doubled the S&P 500 since 1988.
But investors looking for specific trends, like value stocks, can pair the Zacks Rank with our Style Scores system. Our Style Scores are complementary indicators designed to find stocks with the best chances of beating the market over the next 30 days.
Of these indicators, one of our most popular categories has proven to be the “Value” category. Value investors love this category because it seeks to identify undervalued stocks by comparing key metrics like P/E ratio, P/S ratio, and Cash Flow/Share to the industry and market averages.
With that said, we’ve found five tech stocks that all sport a Zacks Rank #1 (Strong Buy) and an “A” grade in the Value category of our Style Scores system. Value investors, check these out:
1. Alps Electric (APELY - Free Report)
Alps Electric is a Japan-based company mainly engaged in the manufacture and sale of electronic components and audio equipment. The company is currently sporting a P/E ratio of 12.34, which bests its “Computer - Peripheral Equipment” average of 21.91. Alps Electric does have a PEG ratio of 1.47, which is not traditionally great—but it still comes in better than the industry average of 3.20. On top of this, the company is currently generating about $6.25 in cash per share, which is a sign that its financial health is on the uptick.
Changyou.com is a developer and operator of online games in China, and it has been a big beneficiary of the recent Chinese internet boom. Additionally, the stock has a P/E ratio of just 10.58 and a PEG ratio of 0.52, which are both better than the respective “Internet – Content” averages of 31.15 and 1.34. Also, the company’s P/B ratio of 1.62 and P/CF ratio of 12.27 provide further proof that the stock is trading at a discount to the market. Changyou is also sporting a better-than-industry EV/EBITDA ratio.
3. Juniper Networks (JNPR - Free Report)
Juniper Networks is a provider of Internet infrastructure solutions, including routers, switches, network management software, and network security products. The stock is currently sporting an impressive P/E ratio of just 12.41. Furthermore, its PEG ratio of 1.21 is better than the “Wireless Equipment” industry average of 1.34. Juniper’s P/S ratio of 2.04 is just slightly above “undervalued” territory, but with sales expected to grow both this year and next year, that could improve soon. Finally, Juniper has a P/B ratio of 2.08, which is well below the S&P 500 average of 3 and further underscores why this is one of the more undervalued tech stocks on the market right now.
4. Micron Technology (MU - Free Report)
Micron Technology is a semiconductor manufacturing company that has emerged has one of the hottest stocks in this booming industry. But even with shares gaining over 60% year-to-date, the company’s P/E ratio is still a miniscule 5.80 and its PEG ratio is currently sitting at 0.58. Furthermore, while its P/S ratio of 2.25 isn’t necessarily excellent, it shows that the company does have a strong revenue stream. On top of this, the stock’s P/B ratio of 2.30 and P/CF ratio of 11.77 are both firmly in a range that would be considered undervalued.
5. Fujifilm Holdings (FUJIY - Free Report)
Fujifilm is one of the world’s most recognizable brands in the camera, film, and imaging equipment business. Right off the bat, we see that Fujifilm’s P/E ratio is an impressive 14.35, which is also significantly better than its industry’s average of 28.80. On top of this, the company’s P/S ratio of 0.80 is significantly better than the industry and market average. Fujifilm is also generating $5.25 in cash per share, which bests its industry’s average of $.347 per share. Finally, the company currently has a P/B ratio of just 0.82.
Want more stock market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>