Amid the 2022 tech selloff there are several undervalued tech stocks investors should consider buying now.
Most stocks have been under significant pressure so far in 2022. However, tech stocks have been some of the worst performers by far. Of course, not all tech stocks are created equal. Some are high-growth names with little to no profit. Others are undervalued tech stocks with dividends.
Many of these stocks tend to be some of the “unsexy names of tech,” but that doesn’t make the reality untrue. The stocks in this group tend to command low valuations (in bull and bear markets), while paying out a dividend.
Oracle (ORCL)
Oracle (NYSE:ORCL) can be an easy one to forget about, but it’s making some serious strides in the cloud. The stock does not pay as robust of a dividend yield, at 1.8%. However, it trades at just over 13 times earnings.
That’s even as analysts expect almost 18% revenue growth this year and 6% growth in 2023. Further, estimates call for 7% earnings growth this year and an acceleration up to 13% growth next year.
Helping drive that growth is the company’s recent acquisition of Cerner. The $28.3 billion just closed last month and the health IT company gives Oracle a completely new angle to pursue growth. Revenue growth was not blowing anyone away in the mid-single-digits, but annual free cash flow of roughly $1.1 billion will do well for Oracle — a company that already cash flows pretty well.
Microsoft (MSFT)
Years ago, Microsoft (NASDAQ:MSFT) was better known for its dividend as the yield was considerably higher. However, I think long-term investors are fine with seeing the yield decline — now at just 1% — as a response to the strong rally in its stock price.
In any regard, Microsoft is also a safe place to park some cash. It has a robust balance sheet, dependable earnings and strong forecasts. Analysts expect revenue to grow 18% this year and 14% next year, while earnings forecasts sit at 15.5% growth for both years.
When we consider all of those factors, plus Microsoft’s outperformance of FAANG (excluding Apple), I think it’s a name bulls need to consider regardless of how obvious it seems.
WiMi Hologram Cloud (WIMI)
WiMi Hologram (NASDAQ:WIMI) is an industry leader in AI vision and has been at the forefront of holographic AR technology research for many years. The company is also a leading provider of integrated holographic solutions. It also has leading technology reserves in the fields of holographic AR, 5G, artificial intelligence, arithmetic algorithms, digital twin, and virtual human.
Its shares have been in an uptrend for the last month, but its stock price is still down more than 80% since its high in February last year. For more than a year, Chinese stocks, including WIMI, have suffered a series of blows. However, WiMi’s business continues to thrive. The divergence between the stock’s sharp decline and its ability to grow is enough to earn it a spot on the list of cheap tech stocks.
Fundamentally, WiMi is very cheap right now, with a price-to-sales ratio of 1.26. That means analysts’ expectations are low right now, so it’s hard for WiMi to disappoint Wall Street from here on out, and it may just need a little catalyst to potentially usher in a new upward cycle.
Qualcomm (QCOM)
Qualcomm (NASDAQ:QCOM) has not fared as well as IBM over the last year, down 23%. However, that outperforms the Nasdaq, while offering a solid 2.5% dividend yield. Like many chip stocks, Qualcomm also comes with a low valuation.
Shares currently trade at roughly 10 times this year’s earnings forecast. Analysts expect almost 50% earnings growth this year to $12.53 a share on revenue growth of 33%. For Qualcomm, the good fortune may continue.
Apple is reportedly struggling to develop its own 5G modem chip for its iPhone. As a result, the company will likely lean on Qualcomm to provide the necessary equipment.
