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 Digital Turbine, Inc. (NASDAQ:APPS) 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 row of mobile phones, highlighting the company's mobile growth platform.
Digital Turbine, Inc. (NASDAQ:APPS) is a software company that provides technology solutions to help mobile carriers, OEMs, and app publishers improve the distribution and monetization of applications on mobile devices. The company's core offering, SingleTap, allows users to install apps directly from advertisements with a single click, bypassing multiple steps traditionally required.
Market conditions remain challenging for Digital Turbine, Inc. (NASDAQ:APPS) particularly due to soft US device sales. There is also intense competition in the mobile app distribution market, regulatory uncertainty, and the potential for further declines in device sales. However, the company is seeing growth in international markets, and its revenue per device improved. The company is also benefiting from growth in first-party traffic, which offers better results to customers and publishers and results in higher margins for the company.
Digital Turbine, Inc.'s (NASDAQ:APPS) exclusive relationship with Motorola to deliver premium apps and content directly to users' devices, making their daily mobile interactions more personalized and streamlined, is also a significant milestone for the company, as it provides a global platform to showcase its innovative solutions and technology. This collaboration is expected to drive growth and revenue as it expands its reach and user base.
Digital Turbine, Inc.'s (NASDAQ:APPS) stock could go higher if the company's revenue growth stabilizes and its margins improve. The company's alternative app distribution business could also be a tailwind for the company. Analysts have a consensus Buy rating on the stock, with a target price of $3.83, indicating a potential gain of 14.56% from its current price.
Overall APPS ranks 9th on our list of the oversold tech stocks to buy. While we acknowledge the potential of APPS 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 APPS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
