Inflation hit a record high in December. In addition, Economist Leslie Preston of TD Economics said, “After reaching new highs core inflation is likely to get even higher in the first quarter of 2022 on a year-on-year basis.” This is expected to stunt the performance of overvalued tech stocks as the Fed looks ahead to raise interest rates this year. However, the overall tech industry is projected to grow significantly with the digitization and remote working trends.
ETF Trends CEO Tom Lydon recently stated, “Value stocks in particular likely have more room to run.” Also, most experts believe cheap tech stocks might outperform the rest in the near term. According to Silicon Valley legend John Chambers, “Overall, tech is still a great opportunity” to invest.
Given this backdrop, we think it could be wise to add fundamentally sound yet cheap tech stocks Dell Technologies Inc. (DELL), Hewlett Packard Enterprise Company (HPE), LG Display Co., Ltd. (LPL), and NetScout Systems, Inc. (NTCT) to one’s portfolio now. These stocks have an overall Strong Buy or Buy rating in our POWR Ratings system. Moreover, they have an A grade for Value.
Dell Technologies Inc. (DELL)
Round Rock, Tex.-based DELL designs, develops, manufactures, markets, sells, and supports Information technology solutions, products, and services worldwide. The company’s segments include its Infrastructure Solutions Group (ISG) and Client Solutions Group (CSG).
On Nov. 23, 2021, Chuck Whitten, the company’s co-chief operating officer, said, “We are uniquely positioned in the data era, with durable advantages and market-leading positions. Our strategy is focused on growing our core business and in adjacent multi-billion-dollar markets, including multi-cloud, edge, telecom and as-a-Service.”
DELL’s total net revenue increased 20.9% year-over-year to $28.39 billion for its fiscal 2022 third quarter, ended Oct. 29, 2021. The company’s gross margin increased 11% year-over-year to $8.06 billion, while its net income came in at $3.89 billion, up 341.3% year-over-year. Also, its non-GAAP EPS was $2.37, up 16.7% year-over-year.
DELL’s 0.74x forward EV/S is 81.9% lower than the 4.07x industry average Its 0.43x forward P/S is also 89.2% lower than the 3.99x industry average.
Analysts expect DELL’s revenue to be $105.20 billion in its fiscal 2022, representing an 11.5% year-over-year rise. The company’s EPS is expected to increase 3% year-over-year to $8.24 in fiscal 2022. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters. The stock has gained 4.1% in price over the past month to close yesterday’s trading session at $59.95.
DELL’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
Also, the stock has an A grade for Value and a B grade for Sentiment. It is ranked #8 of 49 stocks in the B-Rated Technology – Hardware industry. Click here to see the additional POWR Ratings for Growth, Momentum, Stability, and Quality for DELL.
Hewlett Packard Enterprise Company (HPE)
HPE provides solutions that allow customers to seamlessly capture, analyze, and act upon data in the Americas, Europe, the Middle East, Africa, the Asia Pacific, and Japan. HPE delivers unique, open, and intelligent technology solutions as a service. HPE is headquartered in Palo Alto, Calif.
On Nov.30, 2021, Tarek Robbiati, EVP and CFO of HPE, said, “The demand environment has been incredibly strong and accelerated in the second half of the year, which gives us important momentum heading into next year. We are operating with greater focus and more agility and are well-positioned to deliver against our FY22 outlook.”
HPE’s net revenue increased 2% year-over-year to $7.35 billion for its fiscal fourth quarter, ended Oct. 31, 2021. Its net earnings came in at $2.55 billion, up 1,526.1% year-over-year, while its EPS increased 1,491.7% year-over-year to $1.91.
In terms of forward EV/Sales, HPE’s 1.17x is 71.2% lower than the 4.07x industry average. Also, its 0.77x forward P/S is 80.7% lower than the 3.99x industry average.
Analysts expect HPE’s revenue to be $28.61 billion in its fiscal 2022, representing a 3% year-over-year rise. The company’s EPS is expected to increase 7.9% year-over-year to $2.18 in its fiscal 2023. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past month, it has gained 12.8% in price to close yesterday’s trading session at $17.15.
HPE’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system. HPE has a B grade for Value. It is ranked #10 of 55 stocks in the Technology – Communication/Networking industry. Click here to see the additional POWR Rating for Momentum, Growth, Stability, Sentiment, and Quality for HPE.
LG Display Co., Ltd. (LPL)
Headquartered in Seoul, South Korea, LPL designs, manufactures, and sells thin-film transistor liquid crystal display (TFT-LCD) and organic light-emitting diode (OLED) technology-based display panels.
On Dec. 29, 2021, LPL unveiled its newest OLED TV technology, ‘OLED EX’. Dr. Oh Chang-ho, Executive Vice President & Head of the TV Business Unit at LPL, said, “With our new OLED EX technology, we aim to provide even more innovative, high-end customer experiences through the evolution of our OLED technology, algorithms, and designs.”
For the third quarter, ended Sept. 30, 2021, LPL’s revenues came in at KRW 7.22 trillion ($6.08 billion), up 3.7% sequentially. Its total assets were KRW 37.61 trillion ($31.67 billion) for the period ended Sept. 30, 2021, compared to KRW 36.32 trillion ($30.59 billion) for the period ended June 30, 2021. Furthermore, its net income was KRW 463.47 billion ($390.26 million), up 9.4% sequentially.
In terms of forward EV/S, LPL’s 0.70x is 82.9% lower than the 4.07x industry average Its 0.29x forward P/S is also 92.8% lower than the 3.99x industry average.
LPL’s revenue is expected to grow 22.5% to $25.18 billion in its fiscal year 2021. Its EPS is expected to increase 900% year-over-year to $1.68 for fiscal 2021. Over the past month, the stock has gained 11.7% in price to close yesterday’s trading session at $10.40.
LPL’s POWR Ratings reflect its promising outlook. The stock has an overall B rating, which represents a Buy in our POWR Rating system. LPL has an A grade for Value and a B grade for Stability and Sentiment. It is ranked #5 of 45 in the Technology – Electronics industry. Click here to see the additional POWR Ratings for LPL (Momentum, Growth, and Quality).
NetScout Systems, Inc. (NTCT)
NTCT in Westford, Mass., provides service assurance and cybersecurity solutions for protecting digital business services against disruptions in the United States, Europe, the Asia Pacific, and internationally. Its unique products are nGeniusONE; nGeniusPULSE; nGenius Business Analytics solution.
On Nov. 4, 2021, Anil Singhal, NTCT’s president, and CEO, said, “As ‘Guardians of the Connected World,’ our solutions continue to be vital. We provide borderless visibility and cybersecurity solutions that assure and secure the performance, availability, and security of our customers’ digital ecosystems. Our customers can leverage these solutions to compete more efficiently and effectively in the new economy, which is increasingly essential given the most-recent challenges brought about by the COVID-19 pandemic.”
NTCT’s total revenue was $211.92 million for its fiscal 2022 second quarter, ended September 30, 2021, up 3.2% year-over-year. And its net income was $7.9 million, versus a $3.69 million loss in the year-ago period. Its EPS stood at $0.11, compared to a $0.05 loss per share in the previous period.
In terms of forward EV/S, NTCT’s 2.69x is 33.9% lower than the 4.07x industry average. Also, its 30.4% forward P/S is 30.4% lower than the 3.99x industry average.
Analysts expect NTCT’s revenue to increase 3.7% year-over-year to $886.56 million in its fiscal 2023. Its EPS is expected to increase 10.3% year-over-year to $1.92 in its fiscal 2023. The stock surpassed EPS estimates in three of four trailing quarters. And over the past three months, it has gained 18.4% in price to close yesterday’s trading session at $31.76.
It is no surprise that NTCT has an overall A rating, representing a Strong Buy in our POWR Ratings system. The stock has an A grade for Value and a B grade for Growth and Quality. It is ranked #1 of 77 stocks in the Technology – Services industry. Click here to see the additional ratings for NTCT (Momentum, Stability, and Sentiment).
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DELL shares were trading at $60.17 per share on Thursday afternoon, up $0.22 (+0.37%). Year-to-date, DELL has gained 7.12%, versus a -2.20% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...
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