11 Tech Stocks With Low PE Ratio
In this article, we will take a look at the 11 tech stocks with low PE ratio. To see more such companies, go directly to 5 Tech Stocks With Low PE Ratio.
Tech stocks were crushed in 2022 amid a major growth stock rout that started when market optimism began to recede amid rising inflation, rate hikes, supply chain issues and Russia-Ukraine war. However, some analysts believe the market could rebound in 2023. If it does, tech stocks with solid fundamentals and attractive valuations could bring strong returns for shareholders. According to a Bloomberg report published in December, several notable analysts believe the market could rebound in 2023. In a Bloomberg News survey, about 71% of respondents said they think US equities would rise in the year, versus 19% forecasting declines. The survey included 134 fund managers, including those from BlackRock Inc., Goldman Sachs Asset Management and Amundi SA. However, the respondents said that the stock market could again get hit if inflation persists or if the economy goes into deep recession.
The report quoted Pia Haak, chief investment officer at Sweden’s Swedbank Robur. The analyst said even though the economy might face a recession and falling profits in 2023, they have already discounted part of it in 2022.
“We will have better visibility coming into 2023 and this will hopefully help markets,” Haak added.
However, the market recovery won’t be easy or smooth, many analysts believe. Mislav Matejka, a global equity strategist at JPMorgan Chase & Co. believes the risks the stock market saw in 2022 aren’t over and this makes the analyst “nervous about the outlook” of 2023, especially for the first half of the period, according to a separate Bloomberg report.
A latest report from investment firm Stifel also gives an opportunity to get an idea about what to expect in 2023. The firm said it expects economic growth to be muted in 2023. It still sees a “reasonable” chance of a soft landing but an equal chance of a mild recession. The report said that job losses and volatility would offset the wage gains and consumer benefits from decreasing inflation in 2023.
The Stifel report said that as we will move into mid-2023, investors can begin to see a new “growth cycle” fueled by optimism if the Federal Reserve decides to stop rate hikes and China continues policy of economic reopening after lifting COVID restrictions. These factors, according to the report, can lift the stock market higher in 2023. Stifel expects earnings growth in the 0%–5% range for 2023. The firm also expects S&P 500 total return of roughly 6% and a related price target of 4,000 at year-end.
Image by Sergei Tokmakov Terms.Law from Pixabay
Our Methodology
For this article we used stock screeners to identify tech stocks with PE ratios under 15. We then picked 11 of these stocks that are popular among elite hedge funds tracked by Insider Monkey. For each stock we have mentioned the number of hedge funds having stakes in it as of the end of September. We have also mentioned analyst ratings and growth catalysts for these companies. The list is ranked in descending order of PE ratios.
11 Tech Stocks With Low PE Ratio
11. Applied Materials, Inc. (NASDAQ:AMAT)
P/E Ratio: 14.67
Number of Hedge Fund Holders: 67
Applied Materials, Inc. (NASDAQ:AMAT) sells materials engineering solutions in the semiconductor industry. It is one of the most important tech stocks which currently have a low PE ratio. In December, Bernstein analyst Stacy Rasgon, mentioned several stocks as favorable semiconductor picks for 2023 and Applied Materials, Inc. (NASDAQ:AMAT) was one of them. Applied Materials, Inc. (NASDAQ:AMAT) is also a dividend stock. Applied Materials, Inc. (NASDAQ:AMAT) in December declared a $0.26/share quarterly dividend. Forward dividend yield at the time came in at 0.95%. The dividend was payable March 16 for shareholders of record February 23.
As of the end of the third quarter, 67 hedge funds tracked by Insider Monkey reported having stakes in Applied Materials, Inc. (NASDAQ:AMAT).
10. Flex Ltd. (NASDAQ:FLEX)
P/E Ratio: 13.63
Number of Hedge Fund Holders: 57
Flex Ltd. (NASDAQ:FLEX) is a Singapore-based manufacturing company that has performed pretty well over the past year, gaining 31%. Still, Flex Ltd. (NASDAQ:FLEX) has a low PE ratio when compared to peers. Flex Ltd. (NASDAQ:FLEX) is one of the biggest electronics manufacturing services and OEM companies in the world in terms of revenue. Flex Ltd. (NASDAQ:FLEX) has a diversified business model as it’s involved in lucrative markets including automotive, consumer healthcare, robotics and power. In October, Flex Ltd. (NASDAQ:FLEX) posted its second quarter results, according to which its adjusted EPS in the period came in at $0.63, beating estimates by $0.12. Revenue in the quarter jumped 25% to reach $7.77 billion, beating estimates by $550 million. For Q3, Flex Ltd. (NASDAQ:FLEX) expects revenue to come in between $7.3 billion to $7.7 billion, versus consensus of $7.27 billion.
9. Skyworks Solutions, Inc. (NASDAQ:SWKS)
P/E Ratio: 12.94
Number of Hedge Fund Holders: 39
Yet another semiconductor stock in our list, Skyworks Solutions, Inc. (NASDAQ:SWKS) has lost about 33% over the past year. Skyworks Solutions, Inc. (NASDAQ:SWKS)’ management is trying to cut the company's reliance on mobile revenue. As of FY’22, Broad market revenue accounts for about 36% of the total revenue of Skyworks Solutions, Inc. (NASDAQ:SWKS). Back in November, investment firm KGI Securities analyst Derek Chang upgraded Skyworks Solutions, Inc. (NASDAQ:SWKS) to Outperform from Neutral with a $130 price target.
A total of 39 hedge funds out of the 920 funds tracked by Insider Monkey reported having stakes in Skyworks Solutions, Inc. (NASDAQ:SWKS). The total value of these stakes was $964 million. Israel Englander’s Millennium Management is the biggest stakeholder of Skyworks Solutions, Inc. (NASDAQ:SWKS), with a $142.4 million stake.
Here is what Heartland Advisors specifically said about Skyworks Solutions, Inc. (NASDAQ:SWKS) in its Q3 2022 investor letter:
“Before the risk-on rebound early in the quarter, we were searching for opportunities to shift from our defensive stance, looking for beaten-down, high-quality “early cycle” leaders. Existing holding, Skyworks Solutions, Inc. (NASDAQ:SWKS), represents one such opportunity that was added to on weakness.
Skyworks is one of two leading providers of radio frequency system components to smartphone makers and electronics manufacturers. With every step-up in product complexity, over the past two decades, the competitive landscape has shrunk while gross margins have increased significantly. 5G represents another such step-up, which is likely to increase how much Skyworks can make per smartphone.
Apple is a big customer, accounting for more than half of Skyworks’ sales. That customer concentration has depressed Skyworks’ valuation over time. More recently, fears surrounding a global recession and risk to consumer demand have further pressured valuation. However, the handset business is expected to benefit from 5G content, which may help offset some macroeconomic pressures. Away from the handset business, Skyworks’ growth is expected to accelerate thanks to other secular drivers such as WIFI 6 and growth of the industrial internet (i.e., “Internet of Things”).
At a P/E of less than eight and a 2.3% dividend yield, SWKS rarely gets this cheap, making this high-quality stock compelling for longterm investors.”
8. Western Digital Corporation (NASDAQ:WDC)
P/E Ratio: 12.91
Number of Hedge Fund Holders: 46
Western Digital Corporation (NASDAQ:WDC) is one of the famous data storage products companies in the world. Western Digital Corporation (NASDAQ:WDC) has lost about 44% in value over the past year. However, some catalysts point to possible growth in the near future. Earlier this month, Benchmark analyst Mark Miller increased his rating for Western Digital Corporation (NASDAQ:WDC) to Hold from Sell after media reports suggested Western Digital Corporation (NASDAQ:WDC) has re-started merger talks with Japan's Kioxia. The analyst said that the memory chip market may be headed towards a recovery from one of the “worst downturn in years”. However, the analyst warned investors that some factors can still delay this possible rebound. These factors include expectations that the PC, data center and mobile chip sales would continue to remain soft in 2023.
7. Seagate Technology Holdings plc (NASDAQ:STX)
P/E Ratio: 11.12
Number of Hedge Fund Holders: 28
Data storage products company Seagate Technology Holdings plc (NASDAQ:STX)’s shares have taken a beating over the past year, losing almost half of their value. Seagate Technology Holdings plc (NASDAQ:STX) is also expected to continue to suffer from the volatility in the data storage market in the months to come. That’s why Western Digital Corporation (NASDAQ:WDC) is only suitable for those who are willing to wait. In November, after Seagate Technology Holdings plc (NASDAQ:STX) conducted a debt exchange to boost its balance sheet, Susquehanna updated its estimates for Seagate Technology Holdings plc (NASDAQ:STX). According to new estimates, the investment firm expects Seagate’s fiscal 2023 earnings per share to be $1.79, down from a prior view of $1.87 and below the consensus estimate of $1.98 per share.
As of the end of the third quarter, 28 hedge funds tracked by Insider Monkey reported having stakes in Seagate Technology Holdings plc (NASDAQ:STX). The total value of these stakes was $1.1 billion.
ClearBridge Investments made the following comment about Seagate Technology Holdings plc (NASDAQ:STX) in its Q3 2022 investor letter:
“Within cyclical technology, disk drive makers Seagate Technology Holdings plc (NASDAQ:STX) and Western Digital (WDC) were hurt by an inventory correction due to slowing growth in their core PC and server markets as well as uneven demand from hyperscale cloud providers who are watching their budgets. While these two stocks remain inexpensive on a valuation basis, they clearly saw a business slowdown over the last two quarters.”
6. NetApp, Inc. (NASDAQ:NTAP)
P/E Ratio: 9.82
Number of Hedge Fund Holders: 36
NetApp, Inc. (NASDAQ:NTAP) is a hybrid Cloud and data management company. Over the past 12 months NetApp, Inc. (NASDAQ:NTAP) has lost about 32% in value. As of January 13 NetApp, Inc. (NASDAQ:NTAP) has a PE ratio of 9.8. In November, after NetApp, Inc. (NASDAQ:NTAP) posted mixed quarterly results and gave weak guidance, the stock fell. However, investment firm Citi said the drop created a buying opportunity. The firm believes NetApp, Inc. (NASDAQ:NTAP) is continuously gaining market share. Citi’s analyst Jim Suva said in a note that the weak guidance was due to the global macro environment and foreign currency headwinds. He thinks that company is well-positioned within cloud storage market. The analyst has a $110 price target on NetApp, Inc. (NASDAQ:NTAP) with a Buy rating.
As of the end of the third quarter, 36 hedge funds tracked by Insider Monkey reported having stakes in NetApp, Inc. (NASDAQ:NTAP). The total value of these shares were $587.1 million.
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Disclosure: None. 11 Tech Stocks With Low PE Ratio is originally published on Insider Monkey.
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