The longest bull market in U.S. history has fueled a massive surge in technology stocks. The U.S.-China trade war, now entering its second year, has failed to stop the industry from producing market-beating returns month after month.
Against this backdrop, many investors have been priced out of the market for blue-chip technology stocks. Luckily, there are a number of high-value technology plays that can still be had for cheap. Below we will look at three such companies: Glu Mobile (NASDAQ: GLUU), Digital Turbine (NASDAQ: APPS) and Unisys Corporation (NYSE: UIS).
Glu Mobile
- Market Cap: $679 million
- Annual Revenue Growth: 27.8% (2018)
- Free Cash Flow: $28.92 million
Source: Yahoo Finance
2019 has been a challenging year for Glu Mobile. Since peaking at $11.75 back in April, GLUU stock has plunged nearly 60%. The decline can be attributed to a highly volatile mobile gaming industry in which Glu partakes.
After announcing a new business plan, which includes focusing on wholly-owned games rather than third-party licenses, Glu managed to post break-even earnings during its most recent quarter. Company revenues increased 18% year-over year. In the process, Glu has also strengthened its free cash flow position, which will allow it to pursue other growth opportunities that enhance shareholder value. Its free cash flow position was -$39.58 million in 2017 before turning positive in 2018.
Expect to see mobile gaming pick up again. When it does, Glu will be a prime benefactor.
Digital Turbine
- Market Cap: $615 million
- Annual Revenue Growth: 38.6% (2019)
- Free Cash Flow: -$1.05 million
Source: Yahoo Finance
Digital Turbine operates in the mobile app advertising business, a booming but often misunderstood market. The company has grabbed investors’ attention in recent quarters thanks to positive earnings surprises. Among 637 companies listed under the computer and technology group, Digital Turbine is ranked ninth, according to Zacks.
Strong revenue growth and a positive earnings outlook have allowed APPS to become one of the year’s best-performing technology stocks. Since Jan. 1, APPS has more than tripled in value, but still trades for less than $10 a share.
Unisys
- Market Cap: $368.2 million
- Annual Revenue Growth: 3.3% (2018)
- Free Cash Flow: -$42.4 million
Source: Yahoo Finance
Despite having a market cap of less than $400 million, Unisys is a major player in the global enterprise IT market. Unlike the other two companies on the list, Unisys generated $2.83 billion in revenue last year.
After coming off a difficult year, which is well reflected in the stock price, the company managed to turn things around with higher revenue growth and better than expected earnings.
At less than $8 a share, Unisys has extremely low valuation ratios that are well below the industry average. As such, we can expect the stock to recover at least some of its 66% declines since last October.
Conclusion
The technology sector as a whole may be overvalued, but there are still plenty of high-potential stocks that can be had for dirt cheap. If you’re an investor, GLUU, APPS and UIS deserve a second look.
Disclaimer, Author holds no investment position in Glu Mobile, Digital Turbine and Unisys.
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