2023 turned out to be a great year for the technology sector and the Nasdaq-100 index. Over the past year, it has grown by more than 56%. If we do not face new negative and unexpected challenges in the new year, this trend will most likely continue. How investors on a tight budget can benefit from this Told me investment expert Vitaly Bokancha.
Among the thousands of stocks are inexpensive stocks of undervalued technology companies with significant potential. The selection criterion was to search for undervalued companies with a growth potential of 10% or more. The average target price is based on the targets of various investment banks. Also, attention was paid to forecasts by segments of each individual company and their growth in the coming years.
Okta, Inc. (NASDAQ:OKTA)
The company is in the management, identity and access business, providing cloud-based software that helps manage and secure user authentication in applications. In addition, the platform allows developers to create identity controls.
Since the beginning of the year, promotions OCTA increased by approximately 27%, which is low compared to popular tech stocks.
Okta benefits from a large and growing addressable market. According to Grand View Research, the global identity and access management market reached $15,93 billion last year. Experts predict that this segment will expand at a CAGR of 12,6% during the period from 2023 to 2030. At its peak, the industry can generate $41,52 billion in revenue.
Benefits
- Analysts rate OKTA a “moderate buy” with a maximum price target of $120.
- Financially, the company is showing three-year revenue growth of 33%.
Disadvantages
- Analysts' average price forecast is very modest.
- Investors will pay a high premium for growth compared to last year. This means that investors are willing to pay more money than before to see their investment grow.
- It is important for investors that the value of their investment object increases compared to last year. This approach indicates that they value rapid growth and seek to make large profits in a short period of time.
Corsair Gaming (NASDAQ:CRSR)
Manufacturer of computer peripherals and hardware based in Milpitas, California. According to its public profile, Corsair designs and sells a variety of computer products, including high-speed DRAM modules, ATX power supplies, as well as CPU and case cooling systems.
Since the beginning of the year, CRSR has only received less than 7% of its equity value.
Despite its low performance, CRSR may be one of the most attractive bullish investments in technology. According to Grand View Research, the global video game market reached $217,06 billion last year. Experts predict that from 2023 to 2030, this sector will grow by 13,4% annually. At its peak, we're talking about $583,69 billion in annual revenue. Also, when gaming becomes a "real" industry, the demand for peripherals should skyrocket.
Benefits
- Analysts rate CRSR as a “moderate buy” with an average price target of $17,57, implying about 17% upside.
- CRSR trades at a trailing year-to-sales ratio of 0,97, below the sector median of 1,46.
Disadvantages
- Overall, analyst ratings are somewhat mixed, with three buy recommendations and three hold recommendations.
- Income growth slowed in 2023, raising some questions about demand.
Teladoc (NYSE:TDOC)
An international telemedicine and virtual healthcare company, which gained considerable popularity during the Covid-19 pandemic: in the conditions of the spread of the new virus, contactless services were in the first place. Since then, TDOC has lost such hot demand. TDOC is down more than 15% year-to-date.
From this point of view, if we survive another pandemic, Teladoc could suddenly become a relevant healthcare platform. Experts still see strong growth in the industry, regardless of the sharp catalysts. Grand View Research estimates that the global telemedicine market will reach $101,2 billion by the end of this year. By 2030, the sector's revenue could jump to $455,3 billion. This means an average annual growth of 24,3%.
Benefits
- Despite the short-term loss of relevance in the post-pandemic cycle, analysts still rate the stock as one of the best buys in the technology sector.
- Analysts rate TDOC as a “buy” and have a maximum price target of $34, implying 59% upside potential.
Disadvantages
- The company suffers from significant financial problems, including a low Altman Z-Score (bankruptcy prediction model).
- Therefore, this is not a 100% clear argument in favor of bullish investments in technology.
PayPal (NASDAQ:PYPL)
An international company specializing in financial technologies makes money from the online payment system. A few years ago, it also offered a buy now pay later (BNPL) platform called Pay in 4. This service allows customers to split their purchases into four installments without any interest or fees.
PayPal is among the most high-tech stocks thanks to broader changes in consumer behavior. In particular, young people expect simple digital payment solutions and various service options. Additionally, as digitization becomes the norm in all social transaction paradigms, payment services businesses are presented with enormous opportunities. So PayPal can leverage its huge brand trust component.
Benefits
- Analysts currently recommend PYPL as a “moderate buy” with an average price target of $74,14, implying a 19% upside.
- PayPal's three-year revenue growth rate is 16,7%, which is higher than the industry average of 3,7%.
Disadvantages
- First of all, huge skepticism surrounds PYPL as it has fallen significantly from its 2021 peak market price. This is an example of a high-risk, high-reward bullish technology investment.
Marvell (NASDAQ:MRVL)
Headquartered in Wilmington, Delaware, the company designs and manufactures semiconductors and related technologies. In particular, it focuses on chips for various applications, including data centers, networking and automotive solutions. While it's not a top tech stock, its shares have soared more than 57% year-to-date.
First of all, Marvell benefits from many opportunities to increase demand. For example, look at one aspect of its business, semiconductors for data centers. According to Allied Market Research, the global semiconductor market was valued at $2020 billion in 187,35. The sector could reach $2030 billion by 517,17. This represents a CAGR of 10,5% from 2021 to 2030. Add to that other sectors and you're probably talking about strong growth in the long term.
Benefits
- Analysts rate MRLV as a "moderate buy".
- The average price target is $67,32, representing over 11% upside, and the maximum price target is $100, with over 60% upside potential.
Disadvantages
- While MRVL makes a great argument for bullish technology investment, it's also expensive.
- The stock currently trades at a multiple of 8,44x to trading revenue, well above the sector median of 2,88x.
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