In this piece, we will take a look at the top ten technology stocks that are too cheap to ignore. To ignore our industry introduction, and to jump ahead to the top five stocks in this list, head on over to 5 Technology Stocks To Buy That Are Too Cheap To Ignore.
Taking a look at the broad stock market, which consists of a myriad of sectors such as construction, industrial, agriculture, and furniture, one of the strongest growing sectors is technology. Spurred by the advances in chip fabrication, today’s computing devices are vastly more powerful than those just two decades back. These have driven a variety of technology industries, ranging from enterprise computing to the metaverse.
For investors looking to profit from this growth, this year’s stock market bloodbath spurred by rapid interest rate hikes from the Federal Reserve can provide the perfect opportunity to buy shares. This is simply due to the fact that the share prices that have dropped are due to the general macroeconomic environment and not because of underlying problems with the companies themselves.
The trend in technology stocks can be explained better by no one other than the billionaire Ken Fisher of Fisher Investments. The investor recently outlined that:
. . .that means when we get to the bottom whenever that is, you should expect to see tech, because it’s been lagging, because we’ve had more down days than up this year, which you know by definition since we’ve had a down year in 2022 through the middle of the summer. You should expect to see it leading once we hit that bear market bottom and start on the other side. Now I don’t want to argue with you in this video about direction of the market, I do want to say once you get down this far into a bear market, it is not terribly long in time until you normally get to a bottom. We can debate what that is, but once you get into the bottom, you should see tech leading for about the next year. And therefore, and maybe longer, but for about the next year. And therefore, we should be seeing most of the next year led by tech going up. I want to step back and reiterate, market down, tech down more. Market up, tech up more. Correlation to that is so high and yet not widely perceived by people. I’ve not seen anything stated on this in public anywhere, but it’s a simple, unseen fact. And facts are stubborn things. And the stubbornness of that ripples over into this feature, that I just articulated. As categories, not individual stocks, categories. Falls the most in bear markets, bounces the most for a good long time coming off the bottom. And you should expect that with tech as we hit a bottom, when we hit a bottom.
Building upon Mr. Fisher’s thoughts, research firm Research and Markets believes that the global information technology market was worth $7.8 trillion in 2020, and despite this size, it will still grow at a compounded annual growth rate of 9% to sit at a whopping $11 trillion in 2025.
Today’s piece will focus on the cheap technology stocks that are easy to invest in, and some companies likely to catch your attention include Intel Corporation (NASDAQ:INTC), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), and Advanced Micro Devices, Inc. (NASDAQ:AMD).
Photo by Jonas Leupe on Unsplash
Our Methodology
We took a look at the technology industry to to choose tech companies with solid products and finances and affordable share prices. These stocks currently offer an attractive entry point and are cheap when compared to their true value. These stocks are popular among the hedge funds tracked by Insider Monkey and are also receiving bullish ratings from the Wall Street.
10 Technology Stocks To Buy That Are Too Cheap To Ignore
10. Seagate Technology Holdings plc (NASDAQ:STX)
Share Price as of October 15, 2022: $51.60
Number of Hedge Fund Holders: 25
Seagate Technology Holdings plc (NASDAQ:STX) is an Irish company that provides data storage products. These include solid state drives (SSDs) and hard disk drives (SSDs) for both consumer and enterprise use. The firm is headquartered in Dublin, Ireland.
The ongoing headwinds in the consumer technology segment, stemming from a slowdown in personal computing, have caused many to doubt Seagate Technology Holdings plc (NASDAQ:STX)’s future prospects. However, chip companies such as NVIDIA and AMD have both reported strong data center sales growth annually, and the company’s new product portfolio will aid it to capture the data center market as well.
Seagate Technology Holdings plc (NASDAQ:STX) launched its heat assisted magnetic recording technology (HAMR) HDDs in 2020, and these are forecast to increase their storage capacity to 50TB by 2026 and an aerial density of 6TB/inch by 2030. This is a crucial selling point for data centers, as drives with larger storage end up reducing the space required for setting them up. Seagate Technology Holdings plc (NASDAQ:STX) also pays a 70 cent dividend for a 5.73% yield.
Insider Monkey’s Q2 2022 survey revealed that 30 out of 895 hedge funds had bought Seagate Technology Holdings plc (NASDAQ:STX)’s shares.
Out of these, Jacob Mitchell’s Antipodes Partners is Seagate Technology Holdings plc (NASDAQ:STX)’s largest investor. It owns 1.2 million shares that are worth $88 million.
Seagate Technology Holdings plc (NASDAQ:STX) joins Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), Intel Corporation (NASDAQ:INTC), and Advanced Micro Devices, Inc. (NASDAQ:AMD) in our list of top cheap tech stocks.
9. Teradyne, Inc. (NASDAQ:TER)
Share Price as of October 15, 2022: $70.92
Number of Hedge Fund Holders: 30
Teradyne, Inc. (NASDAQ:TER) is an American company that provides testing equipment for several industries such as semiconductor fabrication, industrial, automotive, and consumer technology. It is headquartered in North Reading, Massachusetts.
Teradyne, Inc. (NASDAQ:TER) is slated to benefit heavily from the ongoing rollout of 3 nanometer semiconductor manufacturing technology. This is the most advanced chipmaking technology in the world, and it involves placing close to 300 million transistors per square millimeter. Teradyne, Inc. (NASDAQ:TER) provides chipmakers with the equipment to test their products after manufacturing, and the growing complexity of the new technology provides the company with strong pricing power and a market edge.
By the end of this year’s second quarter, 30 out of the 895 hedge funds polled by Insider Monkey had invested in Teradyne, Inc. (NASDAQ:TER). Deutsche Bank lowered its price target to $85 from $95 in October 2022, but continued to cite optimism for an elevated semiconductor backlog.
Teradyne, Inc. (NASDAQ:TER’s largest investor is Panayotis Takis Sparaggis’s Alkeon Capital Management which owns 2.9 million shares that are worth $264 million.
Carillon Tower Advisers mentioned the company in its Q1 2022 investor letter. Here is what the fund said:
“Semiconductor test equipment and industrial robot producer Teradyne (NASDAQ:TER) fell after offering lower than expected revenue guidance due to fewer orders from its largest customer. Semiconductor equipment companies as a group underperformed as investors feared a general slowdown in semiconductor demand if the global economy slows.”
8. Lumen Technologies, Inc. (NYSE:LUMN)
Share Price as of October 15, 2022: $6.70
Number of Hedge Fund Holders: 42
Lumen Technologies, Inc. (NYSE:LUMN) is a communications company headquartered in Monroe, Louisiana. Its products and services include fiber infrastructure, optical fiber, cloud services, and data center services.
Lumen Technologies, Inc. (NYSE:LUMN)’s true strength lies in its business value more than its income statement. This is evident from the fact that it sold two of its businesses for more than five times of their operating income, and its current enterprise value of $27 billion is five times its forward operating income of $5.4 billion.
Lumen Technologies, Inc. (NYSE:LUMN) also aims to generate $2.2 billion in free cash flow by the end of this year, and the company’s strategic plans aim to upgrade more than half of its local carrier network to fiber optic by the end of 2027. The firm also has no debt maturing until 2025, which insulates it from shocks during an economic downturn.
Lumen Technologies, Inc. (NYSE:LUMN) also pays a 25 cent dividend for a 14.8% yield. 42 out of the 895 hedge funds polled by Insider Monkey during Q2 2022 had invested in the company.
Lumen Technologies, Inc. (NYSE:LUMN)’s largest investor is Fred Knoll’s Knoll Capital Management which owns 100,000 shares that are worth $1 million.
7. Western Digital Corporation (NASDAQ:WDC)
Share Price as of October 15, 2022: $33.90
Number of Hedge Fund Holders: 43
Western Digital Corporation (NASDAQ:WDC) is an American company that designs and sells storage devices for a wide variety of customers such as gamers, professional designers, and large scale data center operators. The company is headquartered in San Jose, California.
Western Digital Corporation (NASDAQ:WDC) managed to weather the current computing storm well, as, by the end of its fiscal year 2022, the company had brought in $18.8 billion in revenue which marked an 11% annual growth. This was spurred by the growth in the company’s Cloud revenue, which grew by 5% annually and an even stronger 18% sequentially.
Western Digital Corporation (NASDAQ:WDC) performed strongly in the enterprise segment, with its enterprise SSD revenue doubling sequentially and growing by a whopping 38% annually. Insider Monkey’s June quarter of 2022 survey revealed that 43 out of 895 hedge funds had held a stake in the company.
Western Digital Corporation (NASDAQ:WDC)’s largest investor in our database is Andrew Wellington and Jeff Keswin’s Lyrical Asset Management which owns 3.9 million shares that are worth $177 million.
6. Cisco Systems, Inc. (NASDAQ:CSCO)
Share Price as of October 15, 2022: $40.08
Number of Hedge Fund Holders: 63
Cisco Systems, Inc. (NASDAQ:CSCO) is a communications products manufacturer and designer that sells its products all over the world. These products include data center interconnects, switches, collaboration devices, and communications platforms. The company is headquartered in San Jose, California.
Cisco Systems, Inc. (NASDAQ:CSCO) is a behemoth when it comes to free cash flows since the company is an established player in a mature market. Its fiscal year 2022 saw the firm bring in $13 billion in free cash flow, which will aid it in its primary growth strategy of making acquisitions to grow its brand and market presence. The company also has a fortress balance sheet with $19 billion cash, which is significantly larger than its $10 billion in debt.
Cisco Systems, Inc. (NASDAQ:CSCO) also pays a 38 cent dividend for a 3.78% yield. By the end of this year’s second quarter, 63 out of the 895 hedge funds polled by Insider Monkey had held Cisco Systems, Inc. (NASDAQ:CSCO)’s shares.
Out of these, John Overdeck and David Siegel’s Two Sigma Advisors is Cisco Systems, Inc. (NASDAQ:CSCO)’s largest investor. It owns 7.7 million shares that are worth $329 million.
Cisco Systems, Inc. (NASDAQ:CSCO) joins our list of top cheap tech stocks, with some others being Intel Corporation (NASDAQ:INTC), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), and Advanced Micro Devices, Inc. (NASDAQ:AMD).
Click to continue reading and see 5 Technology Stocks To Buy That Are Too Cheap To Ignore.
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Disclosure: None. 10 Technology Stocks To Buy That Are Too Cheap To Ignore is originally published on Insider Monkey.