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: $5.39
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 has put together an impressive year in terms of earnings beats, and shares are starting to behave like one would expect from a hot growth and momentum pick.
That said, MEET still looks relatively cheap right now. The firm is profitable and trading at just 12.7x earnings. It also has a P/S of 2.4, which marks a steep discount to the industry’s average of 4.1. 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. Ribbon Communications (RBBN - Free Report)
Prior Close: $5.34
Created last year through a merger of GENBAND and Sonus Networks, Ribbon Communications makes software and security solutions for cable providers and enterprises. The company has worked with some impressive partners, including Verizon and Microsoft. Shares currently sport a Zacks Rank #2 (Buy).
The merger means this year is one of revenue growth, but looking to 2019, earnings are expected to improve to the tune of 16% from 2018's expected totals. Plus, the stock trades with a PEG of just 0.7, so investors are getting a great price for that growth potential. Other solid valuation metrics, including a P/E of 8.3 and a P/S of 1.0, have earned the stock a grade of “B” in our Value category.
3. AudioEye, Inc. (AEYE - Free Report)
Prior Close: $8.18
AudioEye is a cloud-based digital accessibility company. In short, it works with other firms that are looking to make their own websites and online platforms easier to use for those in need. For instance, AudioEye can help make a website controllable through voice commands, so that people who might not be able to use a keyboard and mouse can have the complete experience of that web-page.
AudioEye issued a reverse stock split and began trading on a Nasdaq exchange earlier this year, so investors are still getting used to its new look. The stock now has a Zacks Rank #1 (Strong Buy) and sports incredible growth prospects. Sales are starting to heat up, with revenue growth expected to reach 99% in fiscal 2019. EPS growth is projected to total 57% for fiscal 2018 and 33% for fiscal 2019.
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