3 Beaten-Down Tech Stocks to Pick Up as Bears Drive Price Down
While the technology sector has produced astounding winners this year – particularly in the field of artificial intelligence – it’s also true that not everybody won, which segues into tech stocks to buy on the dip. Yes, certain circumstances warrant a correction in once-hot entities. However, for some ideas, the red ink may have gone too far.
Now, companies that some saw as overheated have a legitimate reason to be considered undervalued tech stocks. To be fair, the volatility associated with the innovation space may be disconcerting to many investors. However, it’s important to focus on the bigger picture. If you liked an enterprise before the red ink, you should like it even more now that it’s on discount.
On that note, below are some compelling tech stocks to buy.
Qualcomm (QCOM)
While Qualcomm (NASDAQ:QCOM), on paper, appears like one of the undervalued tech stocks to buy on the dip, investors closely following international news will point to a negative justification; basically, China, China, China. No, I’m not going down a geopolitical rabbit hole. Rather, Qualcomm recently suffered from a disappointing sales forecast for the current quarter.
Unfortunately, the issue is that China represents the largest market for smartphones. And demand has not picked up to previously projected levels. That’s a major bummer for Qualcomm. The region provides more than 60% of the company’s sales.
However, I’m also looking at the forward multiple of 12.09. As a discount to projected earnings, the tech giant ranks better than 83.33% of its peers. Plus, the company offers a decent forward dividend yield of 2.79%. That should make it one of the tech stocks to consider.
Finally, analysts still peg QCOM as a consensus strong buy. Also, their average price target lands at $137.63, implying 20% upside potential.
Taiwan Semiconductor (TSM)
Speaking of the world’s second-largest economy, Taiwan Semiconductor (NYSE:TSM) suffers from the alluded decline in smartphone demand. In addition to the erosion of sales for PCs, we have a major problem for semiconductor specialists like Taiwan Semi. Further, the company’s management team already disclosed a gloomy outlook regarding full-year sales.
Also, let’s be blunt: Taiwan Semi faces geopolitical pressures. According to CNBC, China hawk Kyle Bass recently stated that Beijing could attack Taiwan by 2024. Personally, I’m glad Bass said this because, with all due respect to the esteemed analyst, Beijing isn’t stupid.
As stated earlier, I’m not going down a rabbit hole. However, Washington correspondent Julia Ioffe deserves a lot of credit for exposing the quiet part out loud. Essentially, the Chinese know they will face American military fury if they blink the wrong way. Bottom line, TSM is one of the undervalued tech stocks because Taiwan’s predicted demise is (probably) hype.
Also, analysts aren’t worried, pegging TSM a strong buy. Also, the average price target of $125 implies nearly 36% upside potential.
BILL Holdings (BILL)
For those that want to ramp up the risk-reward profile of their tech stocks to buy on the dip, BILL Holdings (NYSE:BILL) may be an intriguing idea for speculators. Claiming to offer an intelligent way to create and pay bills, send invoices, and get paid, BILL offers an enticing enterprise that aligns with the burgeoning gig economy. According to Business Research Insights, the gig economy could hit a valuation of $873 billion by 2028.
To be fair, BILL stock is quite volatile, losing slightly more than 33% over the trailing one-year period. Also, in the trailing month, BILL gave up 13% of equity value. However, this could be a tempting time to dive into what could be a bargain trade. In particular, the company continues to operate as an impressive growth machine. For instance, in the first quarter, the company posted revenue of $272.6 million, up over 63% year-over-year.
Despite the choppiness, analysts peg BILL as a consensus moderate buy. Their average price target stands at $142.54, implying over 35% upside potential. As well, the high-side target of $200 implies almost 90% growth.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
