12 Best Tech Stocks To Buy On the Dip

Published on December 21, 2023 at 12:09 pm by Usman Kabir in Hedge Funds, News

In this article, we discuss the 12 best tech stocks to buy on the dip. If you want to skip our detailed analysis of these stocks, go directly to 5 Best Tech Stocks To Buy On the Dip.

Technology stocks were the winners of the pandemic, climbing to record highs during lockdowns as businesses scrambled to digitize their operations. In 2021, however, this rally started coming to an end, with inflation kicking in and hampering unobstructed growth. The decision of the Federal Reserve to raise interest rates further hit technology stocks, sending them into record dips that wiped billions off the market capitalizations of some companies. Between 2009 and 2020, big tech helped the benchmark S&P 500 climb more than 400%.

During the same time period, the tech-heavy NASDAQ Composite soared in value by more than 400%. Leading this rally were tech stocks like ZoomInfo Technologies Inc. (NASDAQ:ZI), Paycom Software, Inc. (NYSE:PAYC), and Enphase Energy, Inc. (NASDAQ:ENPH). In 2022, however, Wall Street had the worst start to the year in five decades. Inflation, rising energy prices, geopolitical tensions, and rising interest rates created an atmosphere of doom and gloom at the market, raising recession fears and forcing investors away from growth stocks.

As interest rates stabilize and borrowing increases heading into 2024, technology stocks are set to make a comeback (not only the big ones but also the small ones). Investors should consider putting their money into tech stocks that are trading at a discount. Buying these stocks on the dip presents a lucrative trading opportunity since many of these tech firms have growth plans that will act as a catalyst for the shares in both the near and long term. For example, Chad Richison, the CEO of Paycom Software, Inc. (NYSE:PAYC), highlighted some of the plans in the third quarter earnings call.

Richision underscored how the company had been leading innovation in the payroll space for more than two decades, the first step of which was transforming it for the web. He added that the new do-it-yourself payroll tool, Beti, for employees was a part of this innovation strategy. However, the CEO lauded the newest product as a paradigm shift for the industry that will deliver tremendous value to clients. He noted that the firm was putting a lot of focus into innovation and automation to continue to lead the way in this regard.

“Throughout our 25-year history, Paycom innovations have been transforming the payroll and HCM industry. And now we have fundamentally shifted how businesses use core HR and payroll products. We started transforming the industry in 1998 by moving payroll to the web. We have made many innovations in those 25 years, but none more important than do-it-yourself payroll for employees with Beti.

This is a paradigm shift for our industry and delivers tremendous value to our clients when employees do their own payroll. Along with our focus on automating and innovating all of our current products, we’re continuing to enhance our global HCM and payroll product for international enterprises. Today, we announced that we are expanding our global payroll product to include Mexico. During the third quarter, employees in Canada started doing their own payroll with Beti and now employees in Mexico can, too.

We are continuing to help clients navigate to the new way of doing things. And as a result, nearly two-thirds of our clients have made the shift to Beti. For most employees, the value of the perfect payroll is oftentimes immeasurable. If their check is perfect, they don’t need to borrow money from a friend or family member to get through the weekend or make a bill payment.”

Our Methodology

To shortlist stocks for this piece, we used a stock screener to identify technology companies that have dipped more than 30% year-to-date. They were then sorted according to hedge fund sentiment. The hedge fund sentiment around each stock was calculated using the data of around 900 hedge funds tracked by Insider Monkey in the third quarter of 2023. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.

A close-up of a person’s hand holding a printed chart featuring stocks and curves.

Best Tech Stocks To Buy On the Dip

12. Ubiquiti Inc. (NYSE:UI)

Number of Hedge Fund Holders: 12

Decline in Share Price YTD: 50%

Ubiquiti Inc. (NYSE:UI) develops networking technology for service providers, enterprises, and consumers. On November 6, investment advisory BWS Financial maintained a Buy rating on Ubiquiti Inc. (NYSE:UI) stock and lowered the price target to $160 from $375, backing new product introductions to ignite growth for the firm.

At the end of the third quarter of 2023, 12 hedge funds in the database of Insider Monkey held stakes worth $57 million in Ubiquiti Inc. (NYSE:UI), compared to 15 in the preceding quarter worth $76 million.

Just like ZoomInfo Technologies Inc. (NASDAQ:ZI), Paycom Software, Inc. (NYSE:PAYC), and Enphase Energy, Inc. (NASDAQ:ENPH), Ubiquiti Inc. (NYSE:UI) is one of the best tech stocks to buy on the dip.

11. NetScout Systems, Inc. (NASDAQ:NTCT)

Number of Hedge Fund Holders: 17

Decline in Share Price YTD: 30%

NetScout Systems, Inc. (NASDAQ:NTCT) provides service assurance and cybersecurity solutions for protecting digital business services against disruptions. On October 17, investment advisory RBC Capital maintained a Sector Perform rating on NetScout Systems, Inc. (NASDAQ:NTCT) stock and lowered the price target to $25 from $34.

At the end of the third quarter of 2023, 17 hedge funds in the database of Insider Monkey held stakes worth $64 million in NetScout Systems, Inc. (NASDAQ:NTCT), compared to 19 in the previous quarter worth $61 million.

10. Daqo New Energy Corp. (NYSE:DQ)

Number of Hedge Fund Holders: 18

Decline in Share Price YTD: 41%

Daqo New Energy Corp. (NYSE:DQ) manufactures and sells polysilicon to photovoltaic product manufacturers. In late October, Daqo New Energy Corp. (NYSE:DQ) posted earnings for the third quarter of 2023, reporting a revenue of more than $484 million.

At the end of the third quarter of 2023, 18 hedge funds in the database of Insider Monkey held stakes worth $281 million in Daqo New Energy Corp. (NYSE:DQ), compared to 22 in the previous quarter worth $350 million.

9. MaxLinear, Inc. (NASDAQ:MXL)

Number of Hedge Fund Holders: 21

Decline in Share Price YTD: 32%

MaxLinear, Inc. (NASDAQ:MXL) provides systems-on-chips solutions. On October 26, investment advisory Deutsche Bank maintained a Hold rating on MaxLinear, Inc. (NASDAQ:MXL) stock and lowered the price target to $20 from $23.

At the end of the third quarter of 2023, 21 hedge funds in the database of Insider Monkey held stakes worth $107 million in MaxLinear, Inc. (NASDAQ:MXL), compared to 23 in the preceding quarter worth $191 million.

8. Calix, Inc. (NYSE:CALX)

Number of Hedge Fund Holders: 22

Decline in Share Price YTD: 38%

Calix, Inc. (NYSE:CALX) provides cloud and software platforms, and systems and services. On October 25, investment advisory JPMorgan maintained a Neutral rating on Calix, Inc. (NYSE:CALX) stock and lowered the price target to $42 from $51.

Among the hedge funds being tracked by Insider Monkey, Australia-based investment firm Ophir Asset Management is a leading shareholder in Calix, Inc. (NYSE:CALX) with 587,869 shares worth more than $26 million.

7. Wolfspeed, Inc. (NYSE:WOLF)

Number of Hedge Fund Holders: 24

Decline in Share Price YTD: 38%

Wolfspeed, Inc. (NYSE:WOLF) operates as a powerhouse semiconductor company. On November 1, investment advisory Deutsche Bank maintained a Hold rating on Wolfspeed, Inc. (NYSE:WOLF) stock and lowered the price target to $40 from $48.

At the end of the third quarter of 2023, 24 hedge funds in the database of Insider Monkey held stakes worth $173 million in Wolfspeed, Inc. (NYSE:WOLF), compared to 23 in the preceding quarter worth $136 million.

In its Q3 2023 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Wolfspeed, Inc. (NYSE:WOLF) was one of them. Here is what the fund said:

“Stock selection has also been a performance headwind in 2023 with a handful of holdings suffering declines amid rapidly rising interest rates. Wolfspeed, Inc. (NYSE:WOLF), a semiconductor company producing silicon carbide materials and power devices, was one of the primary detractors from Strategy performance in both the third quarter and year-to-date. The company has been hampered by execution issues as it invests to meet the growing demand for substrates and chips for electric vehicles. Additionally, Wolfspeed’s construction of a new silicon carbide fabrication plant in Upstate New York has taken longer than expected to reach critical mass. As one of just a handful of companies in the portfolio that are still not profitable today, Wolfspeed has required additional financing but has been able to secure $1.25 billion in capital from an Apollo-led group as well as $2 billion in upfront cash for a 10-year deal to supply Renesas Electronics with SiC wafers. We remain confident that the company’s addressable market opportunity remains sizable and look for ramping utilization to drive gross margin improvement over time.”

6. SolarEdge Technologies, Inc. (NASDAQ:SEDG)

Number of Hedge Fund Holders: 27

Decline in Share Price YTD: 66%

SolarEdge Technologies, Inc. (NASDAQ:SEDG) markets semiconductor equipment to the solar industry. On December 7, investment advisory Roth MKM maintained a Neutral rating on SolarEdge Technologies, Inc. (NASDAQ:SEDG) stock and raised the price target to $80 from $60.

Among the hedge funds being tracked by Insider Monkey, London-based investment firm Impax Asset Management is a leading shareholder in SolarEdge Technologies, Inc. (NASDAQ:SEDG) with 939,386 shares worth more than $121 million.

In addition to ZoomInfo Technologies Inc. (NASDAQ:ZI), Paycom Software, Inc. (NYSE:PAYC), and Enphase Energy, Inc. (NASDAQ:ENPH), SolarEdge Technologies, Inc. (NASDAQ:SEDG) is one of the best tech stocks to buy on the dip.

In its Q3 2023 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and SolarEdge Technologies, Inc. (NASDAQ:SEDG) was one of them. Here is what the fund said:

“Solar energy technology companies SolarEdge Technologies, Inc. (NASDAQ:SEDG) and Shoals, meanwhile, saw headwinds from destocking in the U.S. and Europe. U.S. demand could slow further due to new net metering rules that reduce the value to consumers from sending excess residential solar energy back to the grid. SolarEdge, which makes inverters for solar systems as well as residential and commercial battery systems, is also facing rising battery competition in the U.S. from Tesla.”

Click to continue reading and see 5 Best Tech Stocks To Buy On the Dip.

AI Fire Sale: Insider Monkey’s #1 AI Stock Pick Is On A Steep Discount

Published on October 30, 2024 at by Inan Dogan, PhD

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A New Dawn is Coming to U.S. Stocks

Published on November 16, 2024 at by Insider Monkey Staff

I work for one of the largest independent financial publishers in the world – representing over 1 million people in 148 countries.

We’re independently funding today’s broadcast to address something on the mind of every investor in America right now…

Should I put my money in Artificial Intelligence?

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Click to continue reading…

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