The market is on a winning streak lately, with growth companies leading the way. This has reduced the number of undervalued tech stocks out there, no doubt.
But don’t fear, there are still plenty of high potential tech stocks out there today selling at reasonable prices. It just requires getting off the beaten path a bit.
While most of the focus lately is on artificial intelligence opportunities, there are some hidden gems, both in AI and other growth sectors, for your tech stocks buy list. These are three of the most affordable tech stocks with excellent prospects for the rest of 2023 and beyond.
Right now, artificial intelligence is the hottest theme in investing. It’s easy to see why, given the rapid pace of developments that we’ve seen in fields such as chat bots and AI-powered image generation.
However, many AI stocks have already run up sharply, making them less of a bargain today. Qualcomm (NASDAQ:QCOM) is a leading AI stock play that is still selling at a reasonable price.
Investors associate QCOM stock with the smartphone market, and rightly so. The firm built its business on top of innovations in mobile telecom standards such as patents for 3G and 4G networking solutions. With smartphone sales slumping lately, QCOM stock fell with it.
But Qualcomm is much more than just smartphones today. Its Snapdragon platform has powered several leading consumer electronic products.
Qualcomm continues to innovate on the cutting-edge of chip technology, including in AI.
In a recent presentation, for example, Qualcomm explains how it is “making AI ubiquitous” by putting artificial intelligence into mobile, autos, tablets, connected appliances and more.
Qualcomm isn’t just theorizing. It has leading AI chip designs including some models which have outperformed Nvidia (NASDAQ:NVDA) units in some performance tests.
Endava (NYSE:DAVA) is an information technology company. It essentially functions as a consulting shop, offering IT solutions to large enterprises that are looking to outsource much of their internal computing infrastructure.
Endava’s business model follows that of industry pioneer EPAM Systems (NYSE:EPAM). EPAM pioneered the idea of hiring IT professionals in lower-cost countries, such as in Eastern Europe, while charging full price for its IT services.
This sort of labor arbitrage has proven highly profitable, with EPAM stock rising more than 1,000% since its IPO 11 years ago. Endava has refined the idea while focusing on verticals, such as IT solutions for banks, insurance, and payments technologies.
DAVA stock has lost more than half its value since the 2021 peak as investors have shunned anything related to banks and payments. The selling accelerated this week as a guidance cut from EPAM sent the whole sector tumbling.
With Endava’s latest drop, it is now going for less than 19 times forward earnings. That’s a huge bargain for a company that has quadrupled both its revenues and earnings per share since 2017 and should return to rapid growth next year.
Fidelity National Information Services (FIS)
Fidelity National Information Services (NYSE:FIS) is a diversified information technology company.
The firm originally built its business around providing core processing functions to banks and financial institutions. In recent years, it has diversified.
Fidelity National Information is now a leader in payment processing thanks to its 2019 purchase of Worldpay. It also entered the market for record-keeping for custodians, asset managers and traders with its Sungard acquisition.
However, like other companies tied to the payments industry, FIS stock has gotten smashed over the past year. With the tailwind from rising e-commerce sales gone, and the potential for a recession, payments stocks are wildly out of favor today.
As a result, FIS stock is down a shocking 48% over the past year. That puts the company at less than 10 times forward earnings, even as analysts project that the firm will return to 10% annualized earnings growth in 2024. Morningstar’s Brett Horn believes FIS stock is worth $83, whereas it trades around $55 today.
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Source: Investor Place