3 Tech Stocks Under $20 To Buy Right Now

The outlook for the tech industry looks bright as a result of the accelerating adoption of artificial intelligence, cloud services, and the rapid digitization of businesses across all sectors. Given the industry’s promising prospects, quality stocks Dropbox (DBX), Spirent Communications (SPMYY) and AudioCodes (AUDC) could be good additions to your portfolio. These shares are currently trading below $20. Read on.

The technology sector is expected to experience robust growth amid digitization across industries and the adoption of advanced technologies as companies try to scale and innovate. The US technology market accounts for 35% of the total world market. So fundamentally strong stocks Dropbox, Inc. (DBX), Spirent Communications plc (SPMYY) and AudioCodes Ltd. (AUDC) could be great investments now.

According to the latest forecast from Gartner, Inc, worldwide IT spending is projected to total $4.50 trillion this year, up 2.4% from 2022. “While inflation is devastating In consumer markets, contributing to layoffs at B2C companies, companies continue to increase spending on digital business initiatives despite the global economic slowdown,” said John-David Lovelock, Gartner distinguished vice president analyst.

Furthermore, the global information technology market is expected to grow at a CAGR of 10.1% by 2028. Additionally, technologies such as cloud computing have been gaining popularity. The global market for cloud computing services is expected to reach $2.10 trillion by 2030, growing at a CAGR of 14.7% through 2030.

Additionally, artificial intelligence, machine learning, and automation are growing exponentially and are expected to drive strong growth for the tech industry.

Investor interest in technology stocks is evident from the Technology Select Sector SPDR ETF (XLK) returns of 12.7% over the past three months and 16.3% over the past nine months.

Take a look at the under $20 stocks mentioned above:

Dropbox, Inc. (DBX)

DBX is a provider of a collaboration platform. Its platform allows users to create, access, organize, share, collaborate and secure content. DBX supports clients in the professional services, technology, media, education, industrial, consumer and retail, and financial services industries.

In forward price/cash flow terms, DBX is currently trading at 8.17x, down 51.6% from the industry average of 16.88x. Its last 12 month EV/EBITDA of 9.09x is 30.5% lower than the industry average of 13.08x.

DBX’s trailing 12-month EBITDA margin of 22.15% is 97.4% higher than the industry average of 11.22%. Its 12-month gross profit margin of 80.89% is 65.2% higher than the industry average of 48.97%.

For the fiscal fourth quarter ending December 31, 2022, DBX revenues increased 5.9% year-over-year to $598.80 million. Its net income increased 163.5% year-over-year to $328.30 million. Additionally, EPS came in at $0.93, representing an increase of 190.6% over the prior year quarter.

Street expects DBX revenue to increase 6.7% year-over-year to $2.48 billion in 2023. Its EPS is expected to increase 7% year-over-year to $1.69 in 2023. Beat EPS estimates in all four quarters later. Over the past nine months, the stock has gained marginally to close the last trading session at $19.96.

DBX’s strong fundamentals are reflected in its POWR ratings. The stock’s overall B rating equates to a Buy on our proprietary rating system. POWR ratings evaluate stocks on 118 different factors, each with its own weighting.

DBX is rated A for Quality and B for Value. Within the Technology – Services industry, it ranks #16 out of 81 shares. Beyond the above, we also rate DBX on Momentum, Growth, Stability, and Sentiment. Get all the DBX ratings here.

Spirent Communications plc (SPMYY)

Headquartered in Crawley, UK, SPMYY provides automated test and assurance solutions for networking, cybersecurity and positioning in the Americas, Asia Pacific, Europe, the Middle East and Africa. The company operates in two segments: Lifecycle Service Assurance and Networks & Security.

On February 28, 2023, SPMYY announced a partnership with Microsoft Corp. (MSFT) for pre-certification of third-party network functions (NFs) on the new Microsoft Azure Operator Nexus platform.

Doug Roberts, general manager of Spirent’s Lifecycle Service Assurance business, said: “Microsoft Azure Operator Nexus is a next-generation hybrid cloud platform for operators built for the future of telecommunications. It will allow operators to be more competitive, offer new services and increase revenue. We’re excited to help Microsoft as it works to support cloud, network, or enterprise edge deployments.”

In forward EV/Sales terms, SPMYY is currently trading at 1.73x, down 36.4% from the industry average of 2.72x. Its last 12 month EV/EBITDA of 8.03x is 38.6% lower than the industry average of 13.08x.

SPMYY’s trailing 12-month EBITDA margin of 21.96% is 95.7% higher than the industry average of 11.22%. Its 12-month gross profit margin of 71.95% is 46.9% higher than the industry average of 48.97%.

For the year ended December 31, 2022, SPMYY’s adjusted revenue increased 5.5% year-over-year to $607.50 million. Additionally, its adjusted operating profit came in at $129.5 million, up 9.3% from the prior year. Its adjusted profit and EPS came in at $114.5 million and $18.75, up 13.5% and 14% year-over-year.

The stock has lost marginally intraday to close the last trading session at $8.60.

It’s no surprise that SPMYY has an overall A rating which equates to a Strong Buy on our POWR ratings system.

It has an A rating for Stability and Quality and a B for Value. The stock ranks first among 40 stocks in the Technology – Hardware industry. We also rate SPMYY on Growth, Sentiment and Momentum. Get all SPMYY ratings here.

Audio Codes Ltd. (AUDC)

Headquartered in Lod, Israel, AUDC offers advanced communications software, products and productivity solutions for the digital workplace. The company offers solutions, products, and services for unified communications, contact centers, VoiceAI business lines, and service provider businesses.

In forward EV/Sales terms, AUDC is currently trading at 1.24x, 54.5% lower than the industry average of 2.72x. Its last 12 month EV/EBITDA of 7.02x is 46.4% lower than the industry average of 13.08x.

AUDC’s trailing 12-month EBITDA margin of 12.47% is 11.2% higher than the industry average of 11.22%. Its 12-month gross profit margin of 64.99% is 32.7% higher than the industry average of 48.97%.

AUDC’s total revenues increased 7.5% year-over-year to $70.66 million in the fourth quarter ended December 31, 2022. Additionally, its gross profit was $46.16 million, up 3.9 % more year after year. Its net income increased 4.1% year-over-year to $7.55 million.

Analysts expect AUDC’s revenue to rise 7.5% year-over-year to $310.18 million in 2024. Its EPS is estimated to grow 13.6% year-over-year to $1.59 in 2024. The shares The AUDC shares have lost 3.7% intraday to close their latest trading session at $14.76.

AUDC’s POWR ratings reflect its strong outlook. The stock has an overall rating of A, which translates to a Strong Buy on our proprietary rating system.

AUDC is also rated A for quality and a B for momentum, value and stability. Ranked #5 out of 51 stocks in the Technology Industry – Communications/Networks rated B. For additional ratings on AUDC growth and sentiment, click here.

What to do next?

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DBX shares were trading at $20.00 per share on Friday morning, up $0.04 (+0.20%). Year-to-date, DBX is down -10.63%, versus a 2.74% rise in the benchmark S&P 500 index over the same period.

About the author: Rashmi Kumari

Rashmi is passionate about capital markets, wealth management and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master’s degree in trading, she aspires to make complex financial issues understandable to individual investors and help them make the right investment decisions.


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