We recently compiled a list of the 10 Oversold Tech Stocks To Buy Right Now. In this article, we are going to take a look at where Concentrix Corporation (NASDAQ:CNXC) stands against the other oversold tech stocks.
In an interview with CNBC on September 30, Dave Sekera, Chief Market Strategist at Morningstar, shared his insights on the current state of the technology sector and the broader market. According to Sekera, the technology sector as a whole is “priced to perfection” and is trading at a 6% premium to fair value.
However, Sekera believes several technology stocks have run up too far trading at over 20% premium to fair value, whereas their sales have been sluggish. Sekera advises taking profits off the table for companies who are trading at a premium to fair value. Sekera’s team is also concerned that the market is overestimating the long-term growth potential of some companies due to artificial intelligence (AI), however, he believes that some of these companies will not benefit enough from AI to justify their current valuation. Sekera recommends four-star rated stocks that are trading at a discount to fair value and suggests swapping out overvalued companies and overextended AI stocks for these companies. Sekera also discussed the broader market, noting that growth stocks have outperformed value stocks for a while. However, he believes that it’s time to look at small-cap and mid-cap value-oriented names and believes that these types of value stocks are due for a rotation.
Sekera notes that the overall US market is currently trading at a 3% premium to fair value. He believes that this rotation into value stocks and small-cap stocks will be driven by the expectation of slowing economic growth in the US and the easing of monetary policy by the Federal Reserve. Historically, small-cap stocks have performed well in these conditions, and value stocks have been left behind in the frenzy to buy AI-related stocks. Sekera expects value stocks to catch up, and he believes that now is a good time to invest in these undervalued stocks.
With the Fed’s dovish stance and the potential for further rate cuts, tech stocks may continue to be a safe haven for investors, with that in context, let’s take a look at the 10 oversold tech stocks to buy right now.
Our Methodology
To compile our list of the 10 oversold tech stocks to buy right now, we used the Finviz and Yahoo stock screeners to find stocks that have fallen significantly on a YTD basis and have a forward P/E of less than 15, as of October 15. We then narrowed our choices to 10 stocks according to their hedge fund sentiment, which was taken from our database of 912 elite hedge funds as of Q2 of 2024. The list is sorted in ascending order of their hedge fund sentiment, as of the second quarter.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 smallcap and largecap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A digital dashboard detailing customer experience/user experience data.
Concentrix Corporation (NASDAQ:CNXC)
Number of Hedge Fund Investors: 25
Forward P/E Ratio as of October 15: 3.92
YTD Performance as of October 15: -49.88%
Concentrix Corporation (NASDAQ:CNXC) is a global technology and services company that offers customer experience (CX) solutions to various industries, including technology, retail, banking, communications, and healthcare. The company’s revenue model is tied to the hours billed for services or transaction volumes processed for its clients. Concentrix Corporation (NASDAQ:CNXC) has a strong foothold in the market, with a diverse range of clients across different sectors. The company’s global operations span across North America, EMEA, APAC, and LATAM
Concentrix Corporation’s (NASDAQ:CNXC) CX solutions are in high demand, and its ability to offer a range of services, including process automation and data analytics, sets it apart from its competitors. Furthermore, the company’s global presence and diverse customer base provide a solid foundation for long-term growth.
In Q2, Concentrix Corporation (NASDAQ:CNXC) reported a 47.4% year-over-year revenue growth, exceeding expectations. This growth has been driven by the acquisition of Webhelp in Q4 2023, which has expanded the company’s customer base and increased its revenue potential. Additionally, the company’s adjusted free cash flow was $200 million in Q2, and management has reaffirmed its goal of reaching $700 million in adjusted free cash flow for the full year.
Concentrix Corporation’s (NASDAQ:CNXC) investment in technology and generative AI is also a positive development. The company’s AI initiatives in knowledge management, customer support, and automation are expected to drive efficiency and improve the company’s competitive position in the market. Additionally, the company’s patent for its AI platform, GILES, which automates coding and testing, is a significant achievement and demonstrates the company’s commitment to innovation.
Concentrix Corporation’s (NASDAQ:CNXC) strong financial performance, solid position in the customer experience industry, and investment in technology and AI make it an attractive investment opportunity. Industry analysts are bullish on the company’s stock price and have a consensus Buy rating at a target price of $76.83, which implies a 39.66% increase from its current level.
Overall CNXC ranks 5th on our list of the oversold tech stocks to buy. While we acknowledge the potential of CNXC as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CNXC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.