We recently published a list of 10 Best Affordable Tech Stocks To Invest In Now. In this article, we are going to take a look at where Gen Digital Inc. (NASDAQ:GEN) stands against the other best affordable tech stocks to invest in now.
What's Happening in the Technology Sector?
The US tech stocks have recently faced significant pressure, contributing to a decline in major stock indexes amid ongoing discussions about tariffs. Semiconductors is one of the segments facing a downturn. Jeff deGraaf, Renaissance Macro Research chairman, joined CNBC on November 17 to talk about the state of semiconductors. deGraaf thinks that the rally as it stands today is somewhat overbought internally. This means that while the overall market may be experiencing upward movement, there are underlying signs that it may not be sustainable. An overbought condition typically indicates that asset prices have risen too quickly and may be due for a correction. However, deGraaf also mentioned that the current market is a trend market, not a momentum market, which suggests price movements are driven by broader economic trends and fundamental factors rather than short-term speculative trading. He notes that after the recent elections, there was no significant change in market momentum. This stability reinforces his view that the market has achieved escape velocity, indicating that it is positioned to continue its upward trend despite potential challenges.
He mentioned that the market is still tilted towards cyclical rather than defensive stocks. However, the situation is tricky as semiconductors are experiencing a downturn, which is a huge cyclical industry group. While the semiconductors have been down the software sector has been up on a relative basis. deGraaf noted that he wants to rotate out semiconductors broadly. While elaborating further he mentioned that his statement is based on relative performance, which is very crucial from an investment perspective. He added that except for a few names the semis have the worst momentum and long-term trend strength in the broad market. deGraaf pointed out that NVIDIA has been an exception to its group let alone the greater market, and for that reason, he also wants to avoid the semiconductor giant and rotate out of semis broadly.
Lastly, he pointed out the software group, saying that a lot of software names are improving and he thinks it makes sense to reallocate dollars to software companies as they have some good momentum.
Moreover, in one of our recent pieces, titled "10 Most Promising New Technology Stocks According to Hedge Funds", we discussed how AI application across various sectors is expected to boost technology IPOs during the year. Here's an excerpt from the article:
After a prolonged slump, the technology IPO is experiencing a revival in 2024, particularly among companies leveraging artificial intelligence. According to a July 10 report by Morgan Stanley, the firm’s bankers predict to see at least 10 to 15 tech IPOs this year, driven by the growing interest in AI applications across various sectors, especially within technology and healthcare.
A close up of a computer monitor with a green padlock icon to symbolize the company's cyber safety solutions.
Our Methodology
To compile the list of the 10 best affordable tech stocks to invest in now, we used the Finviz stock screener, Yahoo Finance, and Seeking Alpha. Using the screener we shortlisted technology stocks trading below the Forward P/E of 15 and whose earnings are expected to grow during the year. Next, we sorted our initial list by market capitalization and cross-checked the Forward P/E of each stock from Seeking Alpha and earnings growth from Yahoo Finance. Lastly, we ranked the stocks in ascending order of the number of hedge fund holders as per Insider Monkey’s database for Q3 2024.
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).
Gen Digital Inc. (NASDAQ:GEN) is a global cybersecurity company that focuses on protecting individuals and businesses from online threats. It operates several well-known brands that provide various cybersecurity solutions, including Norton, Avast, LifeLock, Avira, AVG, ReputationDefender, and CCleaner.
With cybersecurity threats on the rise, the use case of companies like Gen Digital Inc. (NASDAQ:GEN) is getting highlighted. For instance, according to a report published by Security Intelligence on August 19, the US National Public Data Breach resulted in exposing data of an estimated 270 million social security numbers, leaving one out of three Americans at threat of identity attack.
Management of the company noted that the recent identity threat incidents resulted in more customers acquiring its cybersecurity services. During the second quarter results for fiscal 2025, the company reported adding 389,000 new customers to expand its total customer base to 39.7 million.
The company also improved its bookings by 5% year-over-year, marking the 21st consecutive quarter of growth. Its Anti Scam solution provided by Norton uses AI to protect against Identity scams, the app has been downloaded by more than 1.6 million users to date. Management noted that stronger growth in the US market and more awareness of its identity offering resulted in higher revenues for the company. During the quarter it grew its total revenue of $974 million by 3% year-over-year.
The company expects its cyber safety bookings to keep growing throughout the fiscal year 2025 at a steady rate of 4% to 5%. It is one of the best affordable tech stocks to invest in now.
Overall, GEN ranks 8th on our list of best affordable tech stocks to invest in now. While we acknowledge the potential of GEN 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 GEN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
