3 cheap tech stocks poised to rebound

The sale of technology this year has caused the sector to fall valuations at attractive levels. “We are seeing some of the most attractive valuations for this space that we have seen in a long time,” said Jack Janasiewicz, senior portfolio strategist at Natixis Investment Managers Solutions.

Despite recession fears, tech spending doesn’t seem to be slowing down. According to a CNBC Technology Executive Council survey, more than three-quarters of technology leaders expect their organizations to spend more this year.

On top of that, “Mad Money” host Jim Cramer believes the recent rally in the tech sector could turn into a long-term recovery. He also added that an economic downturn could increase demand for services from tech companies.

Against this backdrop, we believe technology stocks AstroNova, Inc. (A LOT), computer working group, incorporated (CTM), and Seiko Epson Corporation (SEKEY), which are currently trading at a low valuation, may soon rebound.

AstroNova, Inc. (A LOT)

ALOT operates as a designer, developer, manufacturer and distributor of specialty printers and data acquisition and analysis systems globally. The Company operates in two segments, Product Identification (PI) and Test and Measurement (T&M).

In terms of its last 12 months PEG, ALOT is trading at 0.04, which is 91.1% below the industry average of 0.48x. Its trailing 12-month price-to-sales multiple of 0.73 is 75.6% below the industry average of 2.98.

ALOT’s net sales increased 6.6% year over year to $31.01 million in the fiscal first quarter ended April 30. Its operating profit improved 3.9% from the prior year period to $0.76 million. The company’s EPS was $0.06.

The stock was down 11.1% year-to-date to close its last trading session at $12.00. However, it gained 1.7% intraday.

A lot POWR Rankings reflect this promising prospect. The company has an overall rating of A, which translates to Strong Buy in our proprietary rating system. POWR ratings rate stocks on 118 different factors, each with its own weighting.

ALOT is rated A in Value and Sentiment and a B in Momentum and Quality. Within the Technology – Material industry, it is ranked #1 out of 55 stocks. To see additional POWR ratings for growth and stability for ALOT, Click here.

Computer Workgroup, Incorporated (CTM)

CTG provides information and technology services and operates in North America, South America, Western Europe and India. The Company operates through three segments, North America IT Solutions and Services; European IT solutions and services; and non-strategic technology services.

In terms of EV/Futures, CTG is trading at 0.30, which is 89% below the industry average of 2.67x. Its price-to-forward multiple of 0.34 is 87.8% below the industry average of 2.79.

During the first quarter that ended April 1, CTG’s non-GAAP operating income increased 26.2% year-on-year to $3.46 million, while its non-GAAP net income GAAP was $2.44 million, up 21.6% year-over-year. The company’s non-GAAP EPS improved 23.1% from the prior year period to $0.16.

Analysts expect CTG’s revenue for the quarter ended June 2022 to be $92.50 million, indicating 0.4% year-over-year growth. The company’s EPS is expected to increase 30.8% from the prior year period to $0.17 for the same quarter.

CTG is down 17.8% year-to-date to close its last trading session at $8.20.

It’s no surprise that CTG has an overall A rating, which translates to Strong Buy in our POWR rating system. The stock has an A rating for value and a B for stability, sentiment and quality. It is ranked No. 3 out of the 81 stocks in the Technology – Services industry.

Beyond what we’ve stated above, we’ve also assigned CTG ratings for growth and momentum. Get all the CTG ratings here.

Seiko Epson Corporation (SEKEY)

SEKEY, headquartered in Suwa, Japan, develops, manufactures and sells services for printing solution products, visual communications and other businesses. The Company operates through three major segments, Printing Solutions; Visual Communications; and manufacturing and apparel related segments.

On June 29, Epson Robots, a subsidiary of SEKEY, announced Advanced Motion & Controls Ltd (AM&C), a Canadian distributor of industrial automation products and solutions, as an official distributor of Epson Robots automation solutions. This is expected to grow the market across Canada by helping businesses with automation solutions.

In the same month, Epson America announced the availability of its on-demand color inkjet label printer through its authorized partners. This could add to the company’s revenue stream.

In terms of EV/Futures, SEKEY is trading at 0.45, 83.1% below the industry average of 2.67x. Its price-to-forward multiple of 0.52 is 81.3% below the industry average of 2.79.

For the fiscal year ended March 31, SEKEY’s revenue grew 13.4% year-on-year, or 1.13 trillion yen ($8.31 billion). Its operating profit is up 98.3% year-on-year to 94.48 billion yen ($695.16 million). The company’s profit for the period attributable to parent company owners rose 198.5% from a year earlier to 92.29 billion yen ($679.04 million).

Analysts expect SEKEY’s revenue for the fiscal year ending March 2023 to be $9.30 billion, a 47.8% year-over-year increase.

SEKEY was down 23.3% year-to-date but gained 1.5% intraday to close its latest trading session at $7.06

This promising outlook is reflected in SEKEY’s POWR ratings. The stock’s overall A rating translates to Strong Buy in our proprietary rating system. SEKEY has an A in value and a B in stability and quality. It is ranked #2 in the technology and hardware industry.

Beyond what we’ve stated above, we’ve also assigned SEKEY ratings for Growth, Momentum, and Sentiment. Get all SEKEY odds here.

ALOT shares were trading at $11.80 per share on Friday afternoon, down $0.20 (-1.67%). Year-to-date, ALOT is down -12.59%, compared to a -17.28% rise in the benchmark S&P 500 over the same period.

About the Author: Anushka Dutta

Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. After…

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