As the overall market sell-off continues, the benchmark indexes have erased last week’s gains and slid into a bear market territory. However, this has caused the stocks of selected fundamentally sound companies to trade at heavily discounted valuations and are poised for a near-term rebound.
Furthermore, according to Vanguard Group, U.S. value stocks are projected to deliver annualized returns of 4.1% over the next 10 years. Increased investor interest in cheap value stocks is evident in the Vanguard Value ETF’s (VTV) 2.4% gains over the past month.
Given this backdrop, we think dirt-cheap yet fundamentally strong stocks Micron Technology, Inc. (MU), Perion Network Ltd. (PERI), Lenovo Group Limited (LNVGY), Telefonaktiebolaget LM Ericsson (publ)(ERIC), and Diodes Incorporated (DIOD) could prove to be wise bets now.
Micron Technology, Inc. (MU)
MU in New York City designs, manufactures, and sells memory and storage products worldwide. The company operates through four segments: Compute and Networking Business Unit; Mobile Business Unit; Storage Business Unit; and Embedded Business Unit.
On May 31, 2022, MU launched two new consumer storage products, the Crucial P3 Plus Gen4 NVMe and Crucial P3 NVMe solid-state drives. This launch of these products is expected to broaden the company’s SSD portfolio and offer its customers convenient storage up-gradation amid today’s digital world.
MU’s revenue came in at $7.79 billion for its fiscal 2022 second quarter, ended March 3, 2022, up 24.9% year-over-year. Its non-GAAP net income came in at $2.44 billion, up 116.7% year-over-year. Also, its non-GAAP EPS came in at $2.14, up 118.4% year-over-year.
In terms of forward EV/S, MU’s 2.32x is 19.4% lower than the 2.88x industry average. Its 2.44x forward P/S is 14.2% lower than the 2.84x industry average.
Analysts expect MU’s revenue to be $33.67 billion in its fiscal 2022, representing a 21.5% year-over-year rise. The company’s EPS is expected to increase 57.8% to $9.56 in 2022. It surpassed the Street’s EPS estimates in each of the trailing four quarters. And over the past month, the stock has gained 6.8% in price to close Friday’s trading session at $75.37.
MU’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to a Strong Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
It has a B grade for Growth, Value, Momentum, Sentiment, and Quality. It is ranked #9 of 95 stocks in the B-rated Semiconductor & Wireless Chip industry. Click here to see the additional ratings for MU (Stability).
Click here to checkout our Semiconductor Industry Report for 2022
Perion Network Ltd. (PERI)
Headquartered in Holon, Israel, PERI provides digital advertising solutions to brands, agencies, and publishers in North America, Europe, and internationally. The company operates across the three faces of digital advertising, namely ad search; social media; and display/video/CTV.
On April 28, 2022, Doron Gerstel, PERI’s CEO, said, “With robust growth, increased profitability, and $342.5 million in cash and zero debt, Perion is poised to further accelerate its momentum. This positions us well for a post-cookie future, one where privacy consciousness will drive more and more advertising decisions.”
For the quarter ended March 31, 2022, PERI’s total revenue came in at $125.31 million, up 39.5% year-over-year. Its non-GAAP net income came in at $20.73 million, up 196.5% year-over-year, while its non-GAAP EPS was $0.44, up 131.6% year-over-year. Also, its adjusted EBITDA was $22.67 million, up 158.1% year-over-year.
PERI’s 0.86x forward EV/S is 60.8% lower than the 2.20x industry average. And its 5.42x forward EV/EBITDA is 36% lower than the 8.47x industry average.
PERI’s revenue is expected to come in at $629.75 million in 2022, representing a 31.6% year-over-year rise. The company’s EPS is expected to increase 37.3% year-over-year to $1.40 for the same period. In addition, it surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past month, the stock has declined 2.5%. However, it has gained 30.5% in price over the past year to close yesterday’s session at $20.79.
It is no surprise that PERI has an overall B rating, which equates to a Buy in our proprietary rating system. In addition, it has an A grade for Value and Sentiment and a B grade for Growth and Quality.
PERI is ranked #2 of 32 stocks in the Internet - Services industry. Click here to see the additional POWR Ratings for PERI (Momentum and Stability).
Lenovo Group Limited (LNVGY)
Based in Quarry Bay, Hong Kong, investment holding company LNVGY develops, manufactures, and markets technology products and services. It operates through the Intelligent Devices Group and Data Center Group segments.
On May 26, 2022, Yuanqing Yang, LNVGY’s Chairman and CEO, said, “All our main businesses are now profitable for the full year, and our new growth engines–SSG, ISG and Mobile–are showing strong momentum. We will capture this window of opportunity, double our R&D investment, drive service-led transformation, realize our ESG goals, and stay flexible and resilient to bring the entire company to new heights.”
LNVGY’s revenue came in at $16.69 billion for its fourth quarter, ended March 31, 2022, up 6.8% year-over-year. Its profit was $412 million, up 58.5% year-over-year, while its EPS came in at 3.20 cents, up 64.9% year-over-year.
The stock’s 0.17x forward EV/S is 94.1% lower than the 2.88x industry average. Its 0.16x forward P/S is 94.3% lower than the 2.84x industry average.
Analysts expect LNVGY’s revenue to increase marginally to $72.34 billion for the fiscal period ending March 31, 2023. The company’s EPS is expected to increase marginally to $3.19 for the same period. Over the past month, the stock has declined marginally to close yesterday’s trading session at $19.21.
LNVGY’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our POWR Ratings system.
It has an A grade for Value and a B grade for Stability. It is ranked #6 of 45 stocks in the Technology - Hardware industry. Click here to see the additional ratings for LNVGY (Growth, Momentum, Sentiment, and Quality).
Telefonaktiebolaget LM Ericsson (publ)(ERIC)
Headquartered in Stockholm, Sweden, ERIC and its subsidiaries provide communication infrastructure, services, and software solutions mainly to the telecom industry. The company operates through four segments: Networks; Digital Services; Managed Services; and Emerging Business and Other.
On May 25, 2022, ERIC and UScellular, the U.S.’ fourth-largest full-service wireless carrier, announced an agreement to accelerate UScellular's 5G network performance. This collaboration could further strengthen their mutual goal of establishing highly efficient 5G connection inclusivity.
For the quarter ended March 31, 2022, ERIC’s net sales increased 10.6% year-over-year to SEK 55.06 billion ($5.60 billion). Its cash and cash equivalents came in at SEK 76.86 billion ($7.81 billion) for the period ended March 31, 2022, compared to SEK 54.05 billion ($5.50 billion) for the period ended Dec. 31, 2021. Also, its total current assets were SEK 207.13 billion ($21.06 billion), compared to SEK 174.81 billion ($17.77 billion), for the same period.
In terms of forward EV/S, ERIC’s 0.89x is 68.8% lower than the 2.84x industry average. The stock’s 1.05x forward P/S is 64.5% lower than the 2.95x industry average.
ERIC’s revenue is expected to be $27.18 billion in 2023, representing a 2.2% year-over-year rise. In addition, the company’s EPS is expected to increase 11.8% to $0.85 in 2023. Over the past month, the stock has gained 3.4% in price to close yesterday’s trading session at $8.34.
It is no surprise that ERIC has an overall B rating, which equates to a Buy in our proprietary rating system. In addition, it has an A grade for Value and a B grade for Stability and Quality.
ERIC is ranked #3 of 54 stocks in the Technology - Communication/Networking industry. Click here to see the additional POWR Ratings for ERIC (Growth, Momentum, and Sentiment).
Diodes Incorporated (DIOD)
DIOD in Plano, Tex., designs, manufactures, and supplies application-specific standard products worldwide in the discrete, logic, analog, and mixed-signal semiconductor markets. It focuses on low pin count semiconductor devices with one or more active or passive components.
On May 26, 2022, DIOD launched its two new multiplexer/demultiplexer (Mux/DeMux) linear ReDrivers™, supporting the 20Gbps DisplayPort™ ultra-high bit rate (UHBR20) transmission mode. These products have better signal integrity tuning and can run between a wide industrial temperature range.
DIOD’s net sales increased 16.7% year-over-year to $482.12 million for the first quarter, ended March 31, 2022. Its non-GAAP net income came in at $80.31 million, up 91.2% year-over-year, while its non-GAAP EPS came in at $1.75, up 88.2% year-over-year.
DIOD’s 1.72x forward EV/S is 39.4% lower than the 2.84x industry average. Its 1.78x forward P/S is 39.7% lower than the 2.95x industry average.
Analysts expect DIOD’s revenue to increase 10.5% to $1.99 billion in 2022. Its EPS is estimated to increase 32.8% to $6.88 for the same period. It surpassed EPS estimates in each of the four trailing quarters. And over the past month, the stock has gained 3.4% in price to close yesterday’s trading session at $78.49.
DIOD has an B overall rating equating to Buy in our POWR Ratings system. It has an A grade for Value and a B grade for Momentum and Sentiment. It is ranked #14 of 95 stocks in the B-rated Semiconductor & Wireless Chip industry. Click here to see the additional POWR Ratings for DIOD (Growth, Stability, and Quality).
Click here to checkout our Semiconductor Industry Report for 2022
MU shares were trading at $70.08 per share on Friday morning, down $5.29 (-7.02%). Year-to-date, MU has declined -24.66%, versus a -13.42% 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.
5 Dirt-Cheap Tech Stocks Poised for a Rebound StockNews.com
