Here at Zacks, we don’t generally classify stocks as “cheap” or “expensive”, and rather than looking at the stock’s face value, we have a system that puts an emphasis on earnings estimate revisions to find stocks that will hopefully be winners for investors.
That being said, low-priced stocks can be attractive to smaller investors that can’t necessarily afford large stakes in companies with higher priced stocks.
When looking at these low-priced stocks, we can look at the same trends in growth, value, and momentum and apply the Zacks Rank to properly analyze the potential that these companies have. We are also keenly aware of the latest sector trends and make sure to cover all of the hottest industries.
Today we’ve highlighted three stocks that fall into the broad “technology” sector. Each of these three stocks is currently trading for less than $10 per share and holds a Zacks Rank #2 (Buy) or better. Take a look at the strong estimate revision activity and other factors that make these tech companies stick out right now:
1. The Meet Group, Inc. (MEET - Free Report)
Prior Close: $3.86
The Meet Group is a social media company offering several different social entertainment apps, including MeetMe, Skout, and Lovoo. These apps are primarily focused on streaming video, mobile chat, gifting, and photo sharing. MEET just exceeded estimates in its most recent earnings report, but shares pulled back after a strong run up to the announcement. This could mean investors have a chance to get in before analyst revisions develop and a post-earnings bottom is solidified.
Moreover, MEET shares look relatively cheap at their current levels. The firm is profitable and trading at just 13x forward earnings. It also has a P/S of 1.8, which marks a steep discount to the industry’s average of 3.9. We often prefer the P/S ratio as a metric of value for smaller tech firms, so it is interesting to see that investors are undervaluing MEET’s revenue stream right now.
2. BlackBerry Limited (BB - Free Report)
Prior Close: $9.33
BlackBerry is best known to the public for its once-iconic brand of smartphones, but the company ditched hardware manufacturing recently and now serves as an enterprise software and services company. The new BlackBerry’s claim to fame is its security software, which is on track to be a major option in the budding self-driving car market.
BB is a Zacks Rank #1 (Strong Buy). A struggle to meet expectations on high valuations has hurt the stock this year, but BlackBerry looks to have found a bottom and could very well be poised to rebound as earnings estimates move higher.
The company has witnessed three positive revisions to its full-year EPS estimates within the past 60 days. Analysts are now expecting earnings to be six cents higher than estimates suggested just two months ago. This positive analyst sentiment should help lift shares if the positive trend holds.
3. Snap Inc. (SNAP - Free Report)
Prior Close: $6.81
Snap is the parent company of Snapchat, a popular picture and video messaging mobile application. It is no secret that Snap has struggled since its IPO in the face of stiff competition from bigger social media companies, but a better-than-expected earnings report helped the stock find a bottom, and now analyst sentiment is improving.
Snap is still expected to be in the red next year, but current estimates have its bottom line improving 37% on strong revenue growth of 34%. The stock has also seen a staggering nine positive revisions to these estimates within the past month.
It has been a rough road for Snap so far, but analysts are no longer arguing that the numbers are improving. The question is what will drive long-term growth, and initiatives like new media partnerships and hardware options seem positive.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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