We recently compiled a list of the Top 10 Undervalued Tech Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Global Payments Inc. (NYSE:GPN) stands against other top undervalued tech stocks to buy according to hedge funds.
Artificial intelligence was the dominant story in the tech market in 2024, driving significant gains in tech stocks. The rapid advancements in AI have been a catalyst for business value, which has been reflected in the stock market performance of companies directly involved in this technology. Another major driver of the outperformers was the crypto industry. The launch of spot bitcoin exchange-traded funds in January 2024 marked the beginning of a big year for cryptocurrencies, which was further bolstered by Donald Trump’s election victory in November.
However, on January 13, CNBC reported that major tech stocks faced pressure, as the specter of higher inflation drove up Treasury yields and dampened expectations for potential Federal Reserve rate cuts this year. Higher yields increase the cost of capital and can lower both consumer spending and corporate investment. The sell-off in tech stocks extended beyond the megacap tech giants, with quantum computing stocks seeing significant drops. The broader market was also affected, with the S&P 500 and Nasdaq Composite each dropping more than 1%, following a hotter-than-expected jobs report and rising inflation expectations among consumers.
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In an interview with CNBC on January 13, Daniel Ives, Global Head of Technology Research at Wedbush Securities, discussed the current state and future prospects of the tech sector, particularly in the context of rising interest rates and a strong dollar. Ives highlighted that the bull market in tech is only halfway through. He argued that strong consumer demand and capital expenditures (CapEx) in artificial intelligence (AI) are driving the sector’s growth, making market dips opportunities to invest in tech stocks. Ives believes that the fundamental strength of tech companies, especially in AI, will continue to drive positive performance and suggests a diversified approach to investing in tech. Ives also discussed the broader market dynamics, including the potential for the Federal Reserve to remain hawkish at its next meeting. He views the current environment as an opportunity to own the winners in the tech sector.
The technology sector continues to offer compelling opportunities for investors seeking value and long-term growth. As the market fluctuates, undervalued stocks offer a critical strategy for maximizing returns.
A payment terminal in action with customers apart of the experience.
Our Methodology
To compile our list of the top 10 undervalued tech stocks to buy according to hedge funds, we used Finviz and Yahoo stock screeners to find the 40 largest technology companies trading below the forward P/E ratio of 15 as of January 13. We then used Insider Monkey’s Hedge Fund database to rank 10 stocks according to the largest number of hedge fund holders, as of Q3 2024. The list is sorted in ascending order of hedge fund sentiment.
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 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Global Payments Inc. (NYSE:GPN)
Number of Hedge Fund Investors: 66
Forward P/E Ratio as of January 13: 8.23
Global Payments Inc. (NYSE:GPN) is a leading provider of payment technology and software solutions for merchants, issuers, and consumers. Global Payments Inc. (NYSE:GPN) has a robust portfolio of products and services, including point-of-sale (POS) systems, integrated and embedded payments, and core payments solutions, as well as issuer solutions for financial institutions. The company earns revenue through transaction fees and software subscriptions.
Global Payments Inc. (NYSE:GPN) is actively refocusing its strategy to streamline and simplify its operations to play to its competitive strengths. The company is consolidating its POS assets under the Genius brand and extending them globally, which will enhance its ability to grow, drive efficiency, and accelerate value delivery for partners and clients. This consolidation is expected to improve the company’s return on invested capital and create a more unified and cohesive go-to-market approach.
Additionally, Global Payments Inc. (NYSE:GPN) is concentrating its investments on the assets and verticals that will be most impactful for driving growth and capturing market share. By better connecting its leading commerce enablement solutions with its POS and software environments, the company aims to deliver a more frictionless experience and drive higher returns.
To further enhance its distribution capabilities, Global Payments Inc. (NYSE:GPN) is expanding its reach through a variety of channels, including direct sales, strategic partnerships, joint ventures, and indirect relationships. The company is particularly focused on growing its integrated and embedded payments business by adding new partners to its ecosystem.
Overall GPN ranks 4th on our list of top undervalued tech stocks to buy according to hedge funds. While we acknowledge the potential of GPN 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 time frame. If you are looking for an AI stock that is more promising than GPN 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.
