Tech Stocks That Are Worth the Investment Right Now
Tech stocks have been investment leaders for decades, primarily due to the growth that they offer. Of course, growth comes at a price, and sometimes tech stocks can sport quite lofty valuations. To help identify tech stocks that haven’t gotten ahead of themselves (and that you can buy right now), GOBankingRates analyzed every component of the XLK ETF, which is a collection of S&P 500 technology sector stocks, and applied certain value screens.
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GOBankingRates began by using Google Finance to identify the 35 most undervalued stocks in terms of P/E ratio. From that list, 11 low P/E stocks with Zacks Ranks of one or two were selected as the most worthy of investment now. The Zacks Ranks, which represent “strong buy” and “buy,” respectively, are determined from four factors relating to earnings.
To provide further context, GOBankingRates included the current price, market cap and earnings per share of each company as of Feb. 22. The Zacks VGM score for each stock, which is a number derived from Zacks evaluation of each stock’s value, growth and momentum, was also included.
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It’s important to note that while the P/E ratio of some of these stocks may seem to be high, they are all lower than the 72.66 average P/E ratio of stocks in the ETF that have positive earnings. Before you invest in any of these stocks, be sure to consult with your financial advisor to ensure that your choices match your investment objectives and risk tolerance. Check out which tech stocks might be worth considering right now.
Last updated: March 3, 2021
Intel Corp. (INTC)
Price: $60.71
P/E ratio: 12.29
EPS: $4.94
Market cap: $246.6 billion
Zacks rank: 2
VGM score: B
Intel is the tech stock with the lowest P/E on this list, at just over 12 times. It’s been favored by momentum investors as of late, already surging nearly 22% in 2021.
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HP Inc. (HPQ)
Price: $27.12
P/E ratio: 13.54
EPS: $2.00
Market cap: $34.9 billion
Zacks rank: 2
VGM score: B
HP Inc. has nearly the same market characteristics as Intel — a low P/E and an early-2021 market surge, of nearly 18% in HP’s case. This combination makes HP attractive to both value and momentum players.
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NortonLifeLock Inc. (NLOK)
Price: $20.51
P/E ratio: 21.41
EPS: $0.96
Market cap: $11.9 billion
Zacks rank: 2
VGM score: C
NortonLifeLock pays a solid 2.5% dividend and is down about 5% thus far in 2021, with a relatively modest P/E of 21.
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Leidos Holdings Inc. (LDOS)
Price: $103.80
P/E ratio: 24.20
EPS: $4.29
Market cap: $14.8 billion
Zacks rank: 2
VGM score: A
After scoring a big 86% gain in 2019, Leidos failed to keep up with the market in 2020, returning just over 5%, and thus far in 2021, it’s down close to 12%. If you’re looking to buy tech stocks when they are down rather than when they are overheating, Leidos should be on your radar.
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Applied Materials Inc. (AMAT)
Price: $115.23
P/E ratio: 27.56
EPS: $4.18
Market cap: $105.7 billion
Zacks rank: 2
VGM score: B
Applied Materials has already skyrocketed in 2021, posting gains of over 41%. However, the venerable chipmaker still only carries a P/E ratio below 30 times, so momentum players may keep pushing it higher.
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Lam Research Corp. (LRCX)
Price: $567.80
P/E ratio: 28.17
EPS: $20.15
Market cap: $81.1 billion
Zacks rank: 2
VGM score: D
Lam Research is another tech stock on a tear, up over 27% already in 2021. The momentum-driven stock is riding the wave of upward revisions to analyst earnings estimates, which is always a good driver for stock prices.
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Skyworks Solutions Inc. (SWKS)
Price: $183.93
P/E ratio: 29.00
EPS: $6.34
Market cap: $30.3 billion
Zacks rank: 1
VGM score: B
If you want to invest in Skyworks Solutions, you have to be a fan of Apple as well. In 2020, Apple was responsible for a whopping 56% of Skyworks Solutions’ revenue.
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Texas Instruments Inc. (TXN)
Price: $173.09
P/E ratio: 29.00
EPS: $5.97
Market cap: $159.3 billion
Zacks rank: 2
VGM score: C
Texas Instruments has benefited as of late from its decision to build inventory during the peak of the coronavirus pandemic. As the recovery is taking hold, Texas Instruments is poised to benefit.
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CDW Corp. (CDW)
Price: $159.32
P/E ratio: 29.26
EPS: $5.45
Market cap: $22.8 billion
Zacks rank: 2
VGM score: A
Formerly known as Computer Discount Warehouse, CDW is a value-added reseller of technology products and cloud services from a variety of well-known tech companies. The company offers a less expensive way to participate in the space.
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Apple Inc. (AAPL)
Price: $126.00
P/E ratio: 34.06
EPS: $3.70
Market cap: $2.1 trillion
Zacks rank: 1
VGM score: B
Apple is one of the most consumer-friendly companies in the world, and its products have a rabid following. A selloff to begin 2021 may have provided an attractive entry point.
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Microsoft Corp. (MSFT)
Price: $234.51
P/E ratio: 34.93
EPS: $6.71
Market cap: $1.8 trillion
Zacks rank: 2
VGM score: D
Microsoft has the highest P/E ratio on the list, but it’s still less than half that of the average tech stock in the XLK ETF. The company has been breaking out primarily due to its cloud-based success, including a recently announced partnership with General Motors’ self-driving car division.
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Methodology: In order to find tech stocks that are worth the investment right now, GOBankingRates analyzed every component of the XLK ETF, which is a collection of S&P 500 technology sector stocks, downloaded from Barchart. GOBankingRates used Google Finance to find the (1) price to earnings ratio at market close Feb. 22, 2021, for each company. Then, GOBankingRates found (2) the Zacks Rank for the 35 most undervalued stocks according to P/E ratio and identified the 11 stocks which have both a low P/E ratio and a Zacks Rank of 1 or 2, which correspond to “strong buy” and “buy” respectively. The Zacks Rank classifies stocks into one of five categories according to four factors related to earnings. While the P/E ratio for some stocks may not appear to be low at first, the average P/E ratio for the ETF as a whole excluding two companies with negative earnings per share is 72.66, so they all have a P/E ratio which is below average for their industry. GOBankingRates also provided supplemental data on the (3) closing price, (4) market cap and (5) earnings per share for each company at market close on Feb. 22, 2021, according to Google Finance, as well as the (6) VGM score for each company according to Zacks, which scores stocks on their value, growth and momentum. All data was gathered on and up to date as of Feb. 22, 2021.
This article originally appeared on GOBankingRates.com: Tech Stocks That Are Worth the Investment Right Now
