Everybody loves Nvidia (NASDAQ:NVDA) and company, but let’s be real – the concept of bargain tech stocks makes a lot of sense. At the end of the day, we all love a good deal.
Listen, I’m not against buying NVDA for the long haul. However, I can also read numbers. With a trailing-earnings multiple of nearly 96X, it just seems a little rich. Yes, the company represents a juggernaut in the innovation space. As well, the underlying artificial intelligence narrative offers a massive addressable market. However, these catalysts appear priced into the security.
On the other hand, we have bargain tech stocks. You don’t see too many articles lavishing praise over these enterprises. However, they play important roles in various sectors of the economy. And they’re simply a better deal from a math perspective.
Again, you don’t need to ignore the hot players because they’ve earned their lofty reputation. However, it’s also not a bad idea to show these bargain tech stocks some love.
STMicroelectronics (STM)
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A multinational corporation and technology firm, STMicroelectronics (NYSE:STM) – also known simply as ST – is the largest European semiconductor contract manufacturing and design company. Per its website, ST represents a leading supplier of many of the key technologies integrated into next-generation consumer devices, specifically microcontrollers. Microcontrollers are compact integrated circuits (ICs) designed to govern a certain operation in an embedded system.
Fundamentally, the beauty of ST lies in the expansive total addressable market. According to Grand View Research, the global microcontroller sector reached a valuation of $32.37 billion last year. Analysts project that by 2030, the segment could reach just under $70 billion in annual revenue. Driving the case for this outsized growth is the wide utility among diverse industries, including telecommunications, healthcare, and automotive.
Right now, STM trades for only 15.67X forward earnings, lower than the sector median 26X. Covering analysts see shares reaching $48. However, the high-side target comes out to $55, implying about 22% upside potential. Therefore, it’s a solid idea for bargain tech stocks to consider.
Ibex (IBEX)
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Billed as an elite customer experience (CX) outsourcer, Ibex (NASDAQ:IBEX) serves a broad range of enterprise-level clients, from startups to scale-ups, and blue-chip giants. Per its website, the company builds powerful customer engagement and insight solutions to help protect client investments, mitigate financial and operational risk, and accelerate return on investment.
As with STMicroelectronics, Ibex may not be a household name here. Nevertheless, it enjoys a massive addressable market. Per Fortune Business Insights, the CX market reached a valuation of $14.95 billion in 2022. From 2023 to 2030, analysts anticipate that the space can expand at a compound annual growth rate (CAGR0 of 16.6%. If so, the industry could be worth $52.54 billion at the forecast period’s culmination.
Presently, IBEX trades at only 7.29X forward earnings. That’s well below the software industry’s median stat of 24.27X. Lastly, it makes a case for bargain tech stocks thanks to analysts pegging shares a moderate buy with a $19.75 target, which implies almost 36% upside potential.
Daktronics (DAKT)
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You may not know the name but chances are, you’ve seen the products of Daktronics (NASDAQ:DAKT). Designing, manufacturing, selling and servicing video displays, scoreboards, digital billboards and dynamic message signs, Daktronics is responsible for getting the word out in the crowded and competitive modern digital ecosystem.
To be fair, the broader discretionary consumer economy faces significant questions. With many companies issuing layoffs, Daktronics’ ability to sell advertising displays may seem limited. Conspicuously, DAKT stock dipped about 10% since the start of the year. Nevertheless, because consumer dollars are limited, companies must fight for every greenback. That could counterintuitively help Daktronics.
Further, with the red ink, DAKT now trades at a lowly earnings multiple of 6.67X without non-recurring items (NRI). As well, shares trade at a revenue multiple of only 0.43X. And aside from a hiccup in 2019, the company has been consistently profitable.
Currently, DAKT features one analyst buy rating with a $12.80 price target, implying 66% growth potential. Thus, it’s one of the bargain tech stocks to put on your watch list.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.
