At Zacks, we try to avoid labeling stocks as “cheap” or “expensive.” Instead, we opt to look beyond a stock’s face value, and our system puts an emphasis on earnings estimate revisions to find stocks that will hopefully be winners for investors.
With that said, low-priced stocks can still be attractive to investors as they present the chance to take a larger position in a company, which they might not be able to in higher-priced stocks.
When searching for these low-priced stocks, we still look for similar trends in growth, value, and momentum. Then we apply the Zacks Rank to properly analyze the potential that these companies have. We are also aware of the latest sector trends and make sure to cover all of the hottest industries.
Today we’ve highlighted three stocks that fall into the broad “technology” sector. Each of these three stocks is currently trading for less than $10 a share and holds a Zacks Rank #1 (Strong Buy) or #2 (Buy) at the moment.
1. Adesto Technologies Corporation IOTS
Prior Close: $7.81 USD
Adesto makes application-specific semiconductors and embedded systems that help drive Internet of Things edge devices, from medical products to industrial equipment and more. The firm is coming off a better-than-projected first quarter of fiscal 2019. The memory products maker’s stock price has also soared 80% in 2019 and is currently a Zacks Rank #2 (Buy).
Adesto’s strong Zacks Rank is supported in larger part by its recent positive earnings estimate revision activity for fiscal 2019 and 2020. Looking ahead, our current Zacks Consensus Estimates call for the firm’s adjusted fiscal 2019 EPS figure to soar roughly 87% as Adesto inches near break-even earnings on the back of 49% revenue expansion. Peaking ahead, the company’s 2020 earnings are projected to skyrocket from an estimated loss of $0.02 per share this year to positive earnings of $0.21. Adesto has also beat quarterly earnings estimates for three straight periods.
2. Glu Mobile Inc. GLUU
Prior Close: $7.05 USD
Glu Mobile is a global developer and publisher of mobile video games, such as MLB Tap Sports Baseball, Deer Hunter, and Kim Kardashian: Hollywood. The company announced at the end of May the launch of a new wrestling game called WWE Universe, as part of a multi-year agreement with WWE WWE. On top of that, Glu Mobile is projected to debut Disney Sorcerer’s Arena DIS in August. Both of these new titles could help GLUU expand its user base and revenues as mobile gaming continues to grow in popularity around the world.
GLUU shares did plummet following the release of its Q1 financial results in early May, despite topping our revenue estimate and matching on earnings. The selloff can be attributed in part to many shareholders taking profits after GLUU’s stellar run from under $2 a share in December 2016 to $11.22 per share on May 6. Glu Mobile’s adjusted fiscal 2019 earnings are projected to skyrocket 250% from $0.10 per share in the year-ago period to reach $0.35 per share. Meanwhile, the company’s fiscal 2019 revenue is projected to jump 18% to $452.82 million. Glu Mobile’s positive longer-term earnings estimate revision activity helps it earn a Zacks Rank #2 (Buy). And its price/sales ratio of 2.7 comes in below its industry’s 3.4 average and gaming giant Take-Two Interactive’s TTWO 4.7.
3. Vipshop Holdings Limited VIPS
Prior Close: $7.01 USD
The Guangzhou, China-based online discount retailer sells popular branded products, from the likes of Nike NKE and more regional-specific companies, throughout China. Vipshop’s first-quarter fiscal 2019 revenue popped 7.3% and its total active customer base expanded by 14%. On top of its under $10 price tag, VIPS shares are currently trading at 9.3X forward earnings, which marks a discount compared to its industry’s 18.6X and is not too far above Chinese e-commerce giant Alibaba’s BABA 7X. On top of that, its price/sales ratio of 0.36 falls well below its industry’s 1.01 average.
Looking ahead, the company’s full-year 2019 EPS figure is projected to surge over 31% to reach $0.76 per share on the back of 3% revenue expansion, which is projected to reach $13.07 billion. Peeking further ahead, VIPS’ adjusted 2020 earnings are projected to climb roughly 31.5% above our current year estimate. Vipshop stock has jumped 33% so far this year. VISP is a Zacks Rank #2 (Buy) at the moment that also sports a “B” grade for Value and an “A” for Momentum in our Style Scores system.
