Technology stocks bounced back in a big way in June thanks to a double-digit recovery for the battered semiconductor industry. As a result, the S&P 500’s information technology index rose at nearly double the rate of the broader stock market.
Surging tech stocks means discounts and value plays are even harder to come by. In the following article, we’ll draw your attention to three companies you can still get on the cheap.
- Hewlett Packard Enterprise Co (NYSE: HPE)
- Snap Inc. (NYSE: SNAP)
- iQIYI Inc. (NASDAQ: IQ)
Hewlett Packard Enterprise
- Market Cap: $20 billion
- Annual Revenue Growth: 6.9% (2018)
- Free Cash Flow: $10 million
After flying under the radar in recent years, Hewlett Packard Enterprise is finally starting to turn heads. The company, which emerged after Hewlett-Packard split into two enterprises back in 2015, reported much better than expected earnings in May. Earlier this year, HPE took a deep dive into the supercomputing market by acquiring Cray for $1.3 billion.
HPE peaked near $17.00 a share back in February but has struggled to return to those levels. It has returned 11% year-to-date, which is well below the S&P 500. Solid growth prospects and an attractive dividend share of more than 3% means HPE is poised to deliver value.
- Market Cap: $19.1 billion
- Annual Revenue Growth: 43.9% (2018)
- Free Cash Flow: -$77.99 million
Snap isn’t the most attractive name in the investment world right now. The social media giant failed to live up to its highly touted initial public offering, prompting many to label it a bust. But at less than $15 a share, SNAP could offer a huge discount for patient investors who are willing to ride it out for the next few years.
Not only is SNAP considered a buy over at Zacks, the company has seen impressive revenue growth over the past few years. Snap generated $1.18 billion in sales last year, a nearly three-fold increase over 2016. Analysts at Zacks believe sales will top $2 billion by 2020 as the company expands its revenue streams. Growth of that magnitude will likely be reflected in the stock price.
SNAP shares have almost tripled in 2019, but are virtually unchanged over year-ago levels.
- Market Cap: $15.2 billion
- Annual Revenue Growth: 43.8% (2018)
- Free Cash Flow: -$11.16 million
You may not have heard of iQIYI, but it has been dubbed the Chinese Netflix for its fast penetration into the country’s online entertainment market. Just this past week, the company announced it had topped 100 million subscribers, which is some 40 million shy of Netflix.
The company’s growth metrics are remarkable. Between 2016 and 2018, iQIYI grew its revenue by 122.3%. In fiscal 2018, total revenues were a hair below $25 billion.
The stock surged in the final trading session of June, but can still be had for less than $21. Year-to-date, IQ stock is up more than 37%.
That technology stocks will continue to rise is not a foregone conclusion.Trade-war tensions, a tech war brewing, a weakening global economy, and disappointing quarterly earnings could stop the recovery dead in its tracks. But if you’re looking for value plays, HPE, SNAP and IQ offer plenty to be excited about regardless of the macro picture.
Disclaimer: Author holds no investment position in Hewlett Packard Enterprise, Snap, or iQIYI at the time of writing.
The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Grizzle hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.