We recently published a list of 12 Best Affordable Tech Stocks to Buy According to Analysts. In this article, we are going to take a look at where Nextracker Inc. (NASDAQ:NXT) stands against other best affordable tech stocks to buy according to analysts.
Stock affordability can be assessed in multiple ways. The most common approach is considering stocks with a market price below a certain threshold. Another method is evaluating stocks based on relative valuation metrics, such as a low price-to-earnings (P/E) ratio or other similar multiples. While we have earlier written about undervalued stocks based on P/Es (Read: Most Undervalued Tech Stocks to Invest), the focus for this article is a blend of both the approaches. Apart from low valuation, investors are often drawn to lower-priced stocks, particularly those under $50, because even small price movements can lead to significant percentage gains. Additionally, many investors prefer owning a larger number of shares in lower-priced stocks rather than a few shares in higher-priced ones.
However, a stock’s affordability alone does not determine its quality or long-term potential. Key factors such as financial stability, business execution, and overall market conditions play a crucial role in a stock’s performance.
Affordable tech stocks are often found in the small- and mid-cap space, particularly within the $10-$50 range, which is the focus of this article. Recently, interest in small- and mid-cap stocks has increased following the volatility in the Magnificent 7 (Mag 7) mega-cap tech stocks. Chris Retzler, portfolio manager of the Needham Small Cap Growth Fund, discussed the outlook for small-cap stocks on CNBC’s Squawk Box on January 17. He noted that while small-cap stocks have underperformed broader market indexes, recent momentum in the Russell 2000 suggests a potential shift. Chris emphasized that small-cap companies are seeking greater economic stability, which, once established, could drive broader market participation and growth. He also highlighted ongoing innovation in industries such as electric vehicles, semiconductors, and data infrastructure, which could benefit smaller firms.
Similarly, in mid-February, Gene Munster, managing partner at Deepwater Asset Management, discussed a potential shift from mega-cap tech stocks toward smaller technology companies. While he remains optimistic about the long-term prospects of the Mag 7, he believes that smaller tech firms—particularly those with a market cap below $500 billion could start outperforming as investors look for new growth opportunities.
Identifying the best affordable tech stocks is particularly challenging, given the sector’s dynamic nature and recent volatility. To gain further insights, we look at another discussion on CNBC from March 24, where Gene Munster again shared his outlook on the tech sector. He pointed to April 2 as a key event, as new tariffs are set to take effect. While acknowledging short-term volatility, Munster remains bullish on tech stocks for the next two years, viewing the market as still in the early stages of an AI-driven growth cycle, unless disrupted by a potential recession.
Despite short-term fluctuations and external factors like tariffs, the long-term outlook for tech remains strong, especially for companies positioned to capitalize on AI-driven growth and broader industry trends. That said, given the recent volatility in large tech stocks, opportunities in small- and mid-cap tech companies have come to the fore, particularly for those with strong financials and innovative offerings. As investors look beyond the Magnificent 7 and large cap tech companies, affordable tech stocks in sectors like AI, semiconductors, and data infrastructure could benefit from increased market attention.
Our Methodology
To identify the best affordable tech stocks to buy according to analysts, we screened for U.S.-listed companies with a share price between $10 and $50 and a market capitalization above $1 billion. These criteria helped us avoid volatile small-cap stocks. Next, we narrowed the selection to stocks trading at or below a forward price-to-earnings (P/E) ratio of 20 while also having an upside potential of at least 20%. From this refined list, we further filtered companies that are widely held by hedge funds, using data from Insider Monkey’s Q4 2024 hedge fund holdings database. Finally, we ranked the top 12 stocks based on their upside potential, placing those with the highest projected gains at the top.
Note: All pricing data is as of market close on March 21.
Why are we interested in the stocks that hedge funds pile into? 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 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
An empty shelf of bifacial PV modules ready to be installed in a large-scale solar project.
Nextracker Inc. (NASDAQ:NXT)
Current Share Price: $46.3; Forward P/E: 11.6
Upside Potential: 21%
Number of Hedge Fund Holders: 41
Nextracker Inc. (NASDAQ:NXT) is a provider of solar tracker systems that optimize energy production for utility-scale solar farms. Its intelligent tracking solutions allow solar panels to follow the sun’s movement, maximizing energy output and improving project yield.
With economic uncertainty prompting organizations to be more cost-conscious, demand for Nextracker Inc. (NASDAQ:NXT)’s advanced tracking technology is expected to rise. By improving solar panel efficiency, the company’s solutions help solar farms optimize costs, making them increasingly attractive amid growing solar energy investments. This positions the company for steady, long-term growth.
Supporting this positive outlook, Jefferies upgraded the stock at the end of January, raising its rating to Buy from Hold and increasing the price target to $56 from $46. The analyst, previously concerned about a slowing U.S. market and margin pressures from international expansion, is now more confident as Nextracker Inc. (NASDAQ:NXT) has maintained strong margins and achieved record bookings. Following the latest earnings report, Jefferies boosted EBITDA estimates and called the company a compelling investment in the expanding solar energy sector.
Further strengthening the bullish case, RBC Capital’s Christopher Dendrinos had initiated coverage on the stock recently with an Outperform rating and a $55 price target. He highlighted operational improvements, cost efficiencies, and product innovation, particularly TrueCapture software, which enhances system performance. With a strong balance sheet and free cash flow potential, the analyst believes Nextracker deserves a valuation premium over peers.
Overall, NXT ranks 12th on our list of best affordable tech stocks to buy according to analysts. While we acknowledge the potential of NXT to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NXT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
