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3 Buy-Rated Tech Stocks With Big Growth and Cheap Valuation
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Investors love technology stocks, as their rapid growth and market momentum are undeniably attractive.
Still, many point to the high valuations commonly found within these stocks, steering away those with a value-conscious approach. And with the sector’s massive run in 2023, many are feeling that technology stocks have gotten a bit rich.
However, they’re not all expensive.
Several stocks from the Zacks Computer and Technology sector – Juniper Networks (JNPR - Free Report) , StoneCo (STNE - Free Report) , and RingCentral (RNG - Free Report) – all carry impressive growth expectations paired with sound valuations.
For those seeking a blend of value and growth, let’s take a closer look at each.
Juniper Networks
Juniper Networks, a current Zacks Rank #2 (Buy), is a leading provider of networking solutions and communication devices. Analysts have been particularly bullish for the company’s current fiscal year (FY23), with the $2.35 per share estimate up nearly 8% since July 2022.
JNPR shares currently trade at a 12.8X forward earnings multiple (F1), nicely beneath the 20.8X five-year median. In addition, the forward price-to-sales (F1) presently sits at 1.7X, modestly below the five-year median.
Both values reside below the Zacks – Wireless Equipment industry average.
Image Source: Zacks Investment Research
Image Source: Zacks Investment Research
As mentioned above, the company’s growth expectations remain solid; earnings are forecasted to see 20% growth on 10% higher sales in FY23. And in FY24, estimates allude to a further 7% Y/Y uptick in earnings paired with 3% revenue growth.
JNPR could also entice income-focused investors, with shares currently yielding a solid 2.9% annually paired with a 4% five-year annualized dividend growth rate.
Image Source: Zacks Investment Research
StoneCo
StoneCo offers an end-to-end cloud-based technology platform to conduct electronic commerce across in-store, online, and mobile channels. The stock sports a Zacks Rank #1 (Strong Buy), with earnings expectations drifting higher across several timeframes.
Image Source: Zacks Investment Research
It’s difficult to ignore the company’s growth expectations, with estimates alluding to 115% earnings growth in its current fiscal year (FY23) and a further 20% in FY24. Revenue growth is also apparent, forecasted to improve by 4.4% in FY23 and 7.8% in FY24.
StoneCo shares have become notably cheap on a relative basis given the company’s favorable growth trajectory, with the current 17.4X forward earnings multiple (F1) a fraction of the 45.5X five-year median. The forward price-to-sales (F1) works out to be 1.9X, again a fraction of the steep 14.1X five-year median.
Image Source: Zacks Investment Research
Image Source: Zacks Investment Research
RingCentral
RingCentral, a current Zacks Rank #2 (Buy), provides businesses with cloud-based communication and collaboration products and services. The company has enjoyed positive earnings estimate revisions for its current fiscal year (FY23), with the $3.23 per share estimate up a sizable 33% since July of 2022.
Image Source: Zacks Investment Research
RNG shares presently trade at a 12.3X forward earnings multiple (F1), a fraction of the 29.9X average within the Zacks – Internet and Software Services industry. Further, the current forward price-to-sales (F1) resides at 1.7X, nowhere near the steep 11.5X five-year median.
Image Source: Zacks Investment Research
RNG posted solid results in its latest quarter, exceeding the Zacks Consensus EPS estimate by 10% and delivering a positive 1% revenue surprise. The company’s top-line growth has been mighty impressive, as we can see in the chart below.
Image Source: Zacks Investment Research
And the growth is slated to continue, with estimates calling for 62% earnings growth on 10% higher revenues in FY23. Looking ahead to FY24, expectations reflect a further 13% bump in earnings paired with a 10% sales climb.
Bottom Line
Tech stocks have consistently been a favorite in the market, as their momentum and growth are difficult to ignore. However, some point to their high valuations, steering away potential investors who are looking for a ‘deal.’
Still, all three technology stocks above – Juniper Networks (JNPR - Free Report) , StoneCo (STNE - Free Report) , and RingCentral (RNG - Free Report) – all carry impressive growth expectations paired with sound valuations.
In addition, all three sport a favorable Zacks Rank, indicating optimism among analysts.
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3 Buy-Rated Tech Stocks With Big Growth and Cheap Valuation
Investors love technology stocks, as their rapid growth and market momentum are undeniably attractive.
Still, many point to the high valuations commonly found within these stocks, steering away those with a value-conscious approach. And with the sector’s massive run in 2023, many are feeling that technology stocks have gotten a bit rich.
However, they’re not all expensive.
Several stocks from the Zacks Computer and Technology sector – Juniper Networks (JNPR - Free Report) , StoneCo (STNE - Free Report) , and RingCentral (RNG - Free Report) – all carry impressive growth expectations paired with sound valuations.
For those seeking a blend of value and growth, let’s take a closer look at each.
Juniper Networks
Juniper Networks, a current Zacks Rank #2 (Buy), is a leading provider of networking solutions and communication devices. Analysts have been particularly bullish for the company’s current fiscal year (FY23), with the $2.35 per share estimate up nearly 8% since July 2022.
JNPR shares currently trade at a 12.8X forward earnings multiple (F1), nicely beneath the 20.8X five-year median. In addition, the forward price-to-sales (F1) presently sits at 1.7X, modestly below the five-year median.
Both values reside below the Zacks – Wireless Equipment industry average.
Image Source: Zacks Investment Research
Image Source: Zacks Investment Research
As mentioned above, the company’s growth expectations remain solid; earnings are forecasted to see 20% growth on 10% higher sales in FY23. And in FY24, estimates allude to a further 7% Y/Y uptick in earnings paired with 3% revenue growth.
JNPR could also entice income-focused investors, with shares currently yielding a solid 2.9% annually paired with a 4% five-year annualized dividend growth rate.
Image Source: Zacks Investment Research
StoneCo
StoneCo offers an end-to-end cloud-based technology platform to conduct electronic commerce across in-store, online, and mobile channels. The stock sports a Zacks Rank #1 (Strong Buy), with earnings expectations drifting higher across several timeframes.
Image Source: Zacks Investment Research
It’s difficult to ignore the company’s growth expectations, with estimates alluding to 115% earnings growth in its current fiscal year (FY23) and a further 20% in FY24. Revenue growth is also apparent, forecasted to improve by 4.4% in FY23 and 7.8% in FY24.
StoneCo shares have become notably cheap on a relative basis given the company’s favorable growth trajectory, with the current 17.4X forward earnings multiple (F1) a fraction of the 45.5X five-year median. The forward price-to-sales (F1) works out to be 1.9X, again a fraction of the steep 14.1X five-year median.
Image Source: Zacks Investment Research
Image Source: Zacks Investment Research
RingCentral
RingCentral, a current Zacks Rank #2 (Buy), provides businesses with cloud-based communication and collaboration products and services. The company has enjoyed positive earnings estimate revisions for its current fiscal year (FY23), with the $3.23 per share estimate up a sizable 33% since July of 2022.
Image Source: Zacks Investment Research
RNG shares presently trade at a 12.3X forward earnings multiple (F1), a fraction of the 29.9X average within the Zacks – Internet and Software Services industry. Further, the current forward price-to-sales (F1) resides at 1.7X, nowhere near the steep 11.5X five-year median.
Image Source: Zacks Investment Research
RNG posted solid results in its latest quarter, exceeding the Zacks Consensus EPS estimate by 10% and delivering a positive 1% revenue surprise. The company’s top-line growth has been mighty impressive, as we can see in the chart below.
Image Source: Zacks Investment Research
And the growth is slated to continue, with estimates calling for 62% earnings growth on 10% higher revenues in FY23. Looking ahead to FY24, expectations reflect a further 13% bump in earnings paired with a 10% sales climb.
Bottom Line
Tech stocks have consistently been a favorite in the market, as their momentum and growth are difficult to ignore. However, some point to their high valuations, steering away potential investors who are looking for a ‘deal.’
Still, all three technology stocks above – Juniper Networks (JNPR - Free Report) , StoneCo (STNE - Free Report) , and RingCentral (RNG - Free Report) – all carry impressive growth expectations paired with sound valuations.
In addition, all three sport a favorable Zacks Rank, indicating optimism among analysts.