Tech investors were beginning to enjoy some respite during the start of 2023, with widespread optimism prevailing in the market based on hopes that the inflation was getting under control and the Federal Reserve would soon stop raising interest rates. But all these hopes were dashed as the year progressed. With the banking sector still wavering and tech companies scrambling to cut costs and digesting harsh realities of the financial markets, it’s becoming difficult to retain any optimism. According to a Bloomberg report, Morgan Stanley’s Michael Wilson, who was ranked the best portfolio strategist in a 2022 Institutional Investor survey, said he still believes there is a 20% downside on some of the big technology and meme stocks.
Wilson, who had accurately predicted the stocks selloff in 2022, said that valuations are still high even without an earnings recession.
“Overall, the growthier stuff, even the cyclical names that have gone too far now, could have as much as 20% downside, no problem,” the analyst reportedly said.
"Dramatic" Reset In Valuations Creates Buying Opportunities
However, despite the pessimism, the technology sector is still offering ample opportunities for investors. Some believe the latest selloff has create more buying opportunities for investors who are looking for long-term gains. Some solid companies with strong growth catalysts could rebound in the near future when the market begins to turn the corner. A 2023 outlook report by JPMorgan said that “a dramatic” reset in valuations created the most attractive entry point for stocks and bonds. The firm said in its report that it was expecting a recession in 2023, but at the same it was forecasting that the Federal Reserve will pause interest rate hikes and inflation will come under control.
Here is what the report said:
No one knows precisely when stock markets will bottom. But a ~20% decline in stocks is relatively rare and has historically presented the best entry points for investors with medium- to long-term time horizons. This cycle should be no different. In 2023, we believe equities are well positioned to deliver positive returns. Any material decline from current levels could represent a good buying opportunity.
The technology sector has overtaken the market sentiment, with AI becoming talk of the town following the launch of ChatGPT and the AI wars that ensued between giants like Microsoft, Alphabet and Facebook. The technology industry has some promising growth prospects, including automation, AI, software and more. That’s why in this article we decided to take a look at some technology companies with long-term growth catalysts that are trading at attractive price.
Best Low-Priced Technology Stocks To Invest In
Photo by Chris Liverani on Unsplash Our Methodology
We scanned Insider Monkey’s database of 943 hedge funds and picked 12 technology stocks priced under $20 as of March 28. These are the best low-priced tech stocks to buy according to hedge funds.
Nokia Oyj (NYSE:NOK) ranks 12th in our list of the best low-priced technology stocks to invest in. At the end of the fourth quarter of 2022, 17 hedge funds tracked by Insider Monkey reported owning stakes in Nokia Oyj (NYSE:NOK). The net worth of these stakes was $461 million. The biggest stakeholder of Nokia Oyj (NYSE:NOK) was Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners which had a $48 million stake in the company.
In February, Nokia Oyj (NYSE:NOK) said it was chosen by MTN South Africa for its 5G Radio Access Network equipment providers. Nokia Oyj (NYSE:NOK) will modernize MTNs’s existing 2G/3G/4G radio network and expand MTN's 5G radio network across 2.8K sites in the Central and Eastern part of the country.
Here is what Horos Asset Management has to say about Nokia Oyj (NYSE:NOK) in its Q3 2022 investor letter:
“Two clear examples of value traps that I remember with particular anger includes Nokia (NYSE:NOK). Two companies that suffered a rapid technological disruption in their business model and did not know or were not able to reinvent themselves in time. In the case of Nokia, we were dealing with the undisputed leader in cell phone sales. The company had an (apparently) ultra-solid balance sheet and enviable operating margins. However, the arrival of the smartphone brought a radical change to the industry, to which Nokia did not know how to adapt. In a short period of time, players such as Apple and Samsung wiped the Finnish giant off the map.”
11. United Microelectronics Corporation (NYSE:UMC)
Number of Hedge Fund Holders: 18
Taiwanese semiconductor company United Microelectronics Corporation (NYSE:UMC) is a solid low-priced stock, with 17 hedge fund stakeholders as of the end of the fourth quarter of 2022, as per Insider Monkey’s database. The total worth of these hedge fund stakes was $214 million. The biggest stakeholder of United Microelectronics Corporation (NYSE:UMC) was D E Shaw with a $22.2 million stake.
Recently, Daiwa analyst Rick Hsu upgraded United Microelectronics Corporation (NYSE:UMC) to Buy from Outperform. The analyst also increased his price target on United Microelectronics Corporation (NYSE:UMC) to NT$62 from NT$48. The analyst said there is a probability that immersion deep ultraviolet exports to China will be banned. This development could potentially benefit United Microelectronics Corporation (NYSE:UMC).
For the fourth quarter, United Microelectronics Corporation (NYSE:UMC)’s revenue jumped about 14.8% on a YoY basis to a total of $2.21 billion. Earnings per ADS jumped 18.4% year over year to total $0.251. However, both these figures missed estimates.
Internet of Things company Samsara Inc. (NYSE:IOT) ranks 10th in our list of the best low-priced tech stocks to buy. Earlier in March, Goldman Sachs analyst Kash Rangan upgraded Samsara Inc. (NYSE:IOT) to Buy from Neutral after the company posted strong Q4 results. The analyst also increased his price target for Samsara Inc. (NYSE:IOT) to $27. The analyst cited the management’s hopes that Samsara Inc. (NYSE:IOT) would reach breakeven free cash flow in the fourth quarter of 2023.
As of the end of the fourth quarter of 2022, 23 hedge funds tracked by Insider Monkey had stakes in Samsara Inc. (NYSE:IOT). The total value of these stakes was $258 million. The biggest hedge fund stakeholder of Samsara Inc. (NYSE:IOT) was Zach Schreiber’s Point State Capital which had a $66 million stake in the company.
Xerox Holdings Corporation (NYSE:XRX) is one of the best low-priced tech stocks with a high dividend yield. Recently, Xerox Holdings Corporation (NYSE:XRX) declared a quarterly dividend of $0.25 per share, payable on May 1 to shareholders of record as of March 31.
At the end of the fourth quarter of 2022, 24 hedge funds had stakes in Xerox Holdings Corporation (NYSE:XRX), as per Insider Monkey’s database.
Palantir Technologies Inc. (NYSE:PLTR) shares were hammered in 2022 on the back of a broader rotation away from tech stocks. However, Palantir Technologies Inc. (NYSE:PLTR)’s performance has been decent this year. It’s up 25% year to date through March 28.
Palantir Technologies Inc. (NYSE:PLTR) recently said it won a $99.6 million contract from the U.S. State Department. Palantir Technologies Inc. (NYSE: PLTR), under the contract, will provide software services to the Bureau of Medical Services to keep track of the health, safety, and readiness of State Department personnel.
In February, BofA published a list of stocks that can benefit from the latest AI boom. Palantir Technologies Inc. (NYSE:PLTR) made it to the list as BofA is bullish on the company’s “AI-enabled platforms used by both commercial enterprises and governments.”
Fintech company Payoneer Global Inc. (NASDAQ:PAYO) shares jumped in February after the company posted upbeat Q4 results. GAAP EPS in the period came in at -$0.03, beating estimates by $0.02. Revenue in the quarter increased by about 32% year over year to reach $183.56 million, beating estimates by $12.67 million. For fiscal 2023, Payoneer Global Inc. (NASDAQ:PAYO) expects revenue to come in the range of $800 million - $810 million, versus the consensus of $738.43 million.
At the end of the fourth quarter of 2022, 31 hedge funds tracked by Insider Monkey had stakes in Payoneer Global Inc. (NASDAQ:PAYO). The total value of these stakes was $196 million. The biggest hedge fund stakeholder of Payoneer Global Inc. (NASDAQ:PAYO) was Phill Gross and Robert Atchinson’s Adage Capital Management which had a $35.4 million stake in the company.
Cybersecurity software company Gen Digital Inc. (NYSE:GEN) is one of the best low-priced technology stocks to buy according to hedge funds. Insider Monkey’s database of 943 hedge funds shows that 34 hedge funds had stakes in Gen Digital Inc. (NYSE:GEN). The total value of these stakes was $1.2 billion. The biggest hedge fund stakeholder of Gen Digital Inc. (NYSE:GEN) was Jeffrey Smith’s Starboard Value LP which has a $405 million stake in the company.
In February, Goldman Sachs analysts published a list of stocks that it believes "were punished by investors following 4Q EPS reports but beat margin expectations and where consensus expects margins will expand in 2023." Gen Digital Inc. (NYSE:GEN) was one of these stocks. Goldman Sachs believes these companies are expected to expand net margins by 85 bp in 2023 vs. 2022.
