Buy Now or Regret Later: 3 Tech Stocks Ready to Take Off
It’s a known fact that tech stocks can turbocharge your portfolio. The sector tends to outperform during bull runs, raking in ridiculous returns. The recent AI boom has many companies reaching new heights, and I think the sector still has plenty of room to mature.
Still, prudent investors must be careful when picking their tech stocks, as runaway valuations are possible. With the help of certain screening methods, investors looking for the best tech stocks out there have ways of figuring out which ones deserve a buy.
To come up with the list, I screened for undervalued tech companies with the following metrics:
- Positive year-to-date (YTD) returns
- 12-month forward PE lower than the S&P 500 Information Technology estimated average of 27.3
I sorted the companies based on their YTD performance from lowest to highest to find the best tech stocks to buy that can turbocharge your portfolio.
GoDaddy (GDDY)
Known for its domain registry and website-building capability, GoDaddy (NYSE:GDDY) offers its businesses, entrepreneurs, organizations and developers a one-stop-shop solution to build and host websites. The company operations are split into two main segments:
- Core Platform (Core): offers domain renewal, sales and aftermarket sale of domains
- Applications and Commerce (A&C): offers the company’s website building products, proprietary software, email and productivity solutions
GoDaddy recently released the GoValue API subscription service, allowing its customers to use its machine-learning model trained on over 65 million data points and generate a market value for a domain using the company’s collection of Afternic and GoDaddy domain transactions.
In addition, the company announced GoDaddy Airo, which allows clients to use generative AI to assist them in their online ventures and quickly build their logos, websites and more.
Looking at GoDaddy’s FY’23 results, we can see why the company is gaining momentum. Application and commerce revenue grew 13% year-over-year (YOY), while net income grew by 295%, reaching $1.4 billion.
With a 12-month forward of 25.22, this undervalued gem offers investors a chance to turbocharge their portfolio performance.
Karooooo (KARO)
Karooooo (NASDAQ:KARO) is a fleet management software firm based in Singapore that offers a cloud-based platform for on-the-ground logistics operations. The company’s operations are divided into three segments:
- Logistics: software applications for general operational logistics and last-mile delivery management
- Carzuka: e-commerce and physical marketplace to buy and sell vehicles
- Cartrack: system integration, field worker management, and fleet administration
The company has gained momentum, with KARO stock up 19% YTD. Here’s why I think it will continue.
The company reported a strong Q3’24, with total revenue growing 16% YOY and consolidated EPS growth of 35%. These results were driven by solid results from Cartrack’s subscriber base increase, growth in annual recurring revenue and Carzuka’s earnings growth.
With a 12-month forward PE of 24.07, Karooooo offers an attractive proposition for investors looking to add tech stocks to grow their portfolio. So, to take advantage of the tech sector’s strong performance, keep KARO stock on your watchlist.
Dell Technologies (DELL)
If you are a tech enthusiast, you know Dell Technologies (NYSE:DELL). Dell operates in two primary segments:
- Infrastructure Solutions Group (ISG): offers digital transformation using artificial intelligence, cloud environments and machine learning
- Client Solutions Group (CSG): offers notebook computers, workstations, desktops and peripherals
The company has made various strides in taking advantage of the AI boom with its AI solutions. Its recent announcement about strengthening its collaboration with Nvidia (NASDAQ:NVDA) aims to strengthen the global adoption of AI for enterprises.
With the global push for AI, it’s no wonder the company has gained strong momentum, with DELL stock up 64% YTD.
Looking at its financials, overall revenue for FY’24 decreased. Conversely, diluted earnings per share increased by 35% YOY. In addition, the company has announced a 20% increase in annual cash dividends to $1.78 per share, highlighting confidence in its cash flow capabilities and business.
Despite the market view that tech companies are overvalued, DELL stock’s 12-month forward PE is still trading around 16.39. If you’re looking for tech stocks to buy and turbocharge your portfolio, Dell should be on your list.
On the date of publication, Rick Orford did not hold (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.
