- The tech-heavy Nasdaq has outperformed the S&P 500 and the Dow Jones Industrial Moderate by a huge margin in 2023.
- Receding inflation worries and easing fears about additional Fed payment hikes will likely proceed to elevate companies in the tech sector.
- As such, I used the InvestingPro stock screener to acquire high-quality, undervalued technology gemstones to aquire now with solid upside forward.
The technology-heavy Nasdaq Composite has been the high performer of the three predominant U.S. indices by a huge margin thus a ways in 2023, hovering 29.7% year-to-date.
That compares to a upward thrust of 13.8% for the benchmark S&P 500 over the same time span and a 3.2% make for the blue-chip Dow Jones Industrial Moderate.
The ongoing tech rally has been fueled by increasing indicators that U.S. inflation would possibly maybe possibly possibly also simply like peaked, raising hopes the Federal Reserve will terminate its year-long payment hike cycle.
That, in flip, has boosted shares of the mega-cap tech companies, with Nvidia (NASDAQ:NVDA), Meta Platforms (NASDAQ:META), Tesla (NASDAQ:TSLA), Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOGL), and Microsoft (NASDAQ:MSFT) all posting double-digit year-to-date percentage increases thus a ways.
In opposition to this backdrop, I used the InvestingPro stock screener to observe high of the diversity undervalued tech gemstones to aquire amid the present market setting.
I first scanned for companies with an Investing Legit ‘Gorgeous Price’ upside greater than or equal to 10%. I then filtered for names whose Investing Legit ‘Gorgeous Price’ grade was either ‘Undervalued’, ‘Good deal’, or ‘Gorgeous’.
And folks companies with a market cap of $5 billion and above made my watchlist.
Source: InvestingPro
As soon as the standards were applied, I was left with a crammed with 33 companies.
Of those, Cognizant Know-how Choices (NASDAQ:CTSH) and NetApp (NASDAQ:NTAP) were the 2 that stood out the most to me.
Source: InvestingPro
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1. Cognizant Know-how Choices
Cognizant Know-how Choices stock is up 12.3% year-to-date and will proceed appreciating, in step with the InvestingPro items, as it cements its plot as one in every of the premier plod-to names in the info technology (IT) products and services change.
Cognizant has quite a lot of tailwinds that are anticipated to gas additional good points in its stock in the months forward, with highlights collectively with solid earnings possibilities, and a healthy profitability outlook, as effectively as sturdy development in free money waft yields which must soundless allow it to raise dividend funds.
Source: InvestingPro
The Teaneck, Original Jersey-based fully mostly IT products and services and consulting company has raised its annual dividend payout for three consecutive years. Shares at expose yield 1.81%, which is fairly above the 1.Forty eight% implied yield for the S&P 500 index.
Source: InvestingPro
As Investing Legit aspects out, Cognizant at expose enjoys a ‘Monetary Health’ rating of three.2. That’s predominant as companies with Investing Legit health rankings increased than 2.75 like consistently outperformed the broader market by a huge margin over the past seven years, dating abet to 2016.
Source: InvestingPro
No longer surprisingly, CTSH stock is substantially undervalued in step with the quantitative items in Investing Legit: with a ‘Gorgeous Price’ value target of $85.07, Cognizant shares would possibly maybe possibly possibly seek an upside of roughly 32% from present ranges.
Source: InvestingPro
Cognizant’s stock trades at a cost-to-earnings (P/E) ratio of 14.1, which makes it an absolute good deal in comparison to its predominant opponents, such as Accenture (NYSE:ACN) (28.7 P/E ratio), Infosys (NYSE:INFY) (22.0 P/E ratio), Wipro (NYSE:WIT) (19.1 P/E ratio), and IBM (NYSE:IBM) (60.8 P/E ratio).
As such, I factor in shares of the IT products and services huge are a dapper aquire, in particular at this time valuations.
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2. NetApp
At a present value point of around $73, Investing Legit has flagged NetApp to create predominant long-term value for shareholders in the months forward.
NetApp is a knowledge storage and knowledge administration strategies firm headquartered in San Jose, California. Primarily based in 1992 with an IPO in 1995, the tech firm presents cloud knowledge products and services for administration of applications and knowledge each online and physically.
As Investing Legit aspects out, NTAP stock would possibly maybe possibly possibly seek a upward thrust of around 25% from Tuesday’s closing value, in step with a decision of valuation items, bringing it closer to its ‘Gorgeous Price’ value target of $91.41 per fragment.
Source: InvestingPro
Demonstrating the power and resilience of its change, NetApp sports a cessation to-ideal Investing Legit ‘Monetary Health’ rating of 4 out of 5. The Legit Health rating depends upon on ranking the firm on over 100 factors towards loads of companies in the Info Know-how sector.
Source: InvestingPro
Investing Legit also highlights quite a lot of additional tailwinds NetApp has going for it, collectively with healthy profitability, increasing earnings per fragment, stable money waft development, and a fairly low-payment valuation.
Source: InvestingPro
Taking that into narrative, NTAP is a solid aquire so as to add to a portfolio, in particular as soon as you happen to rob into consideration its right efforts to reach extra money to shareholders in the compose of increased dividend payouts and fragment buybacks.
Source: InvestingPro
The cloud products and services and knowledge administration firm has raised its annual dividend for 10 years working, highlighting its essential display screen document by strategy of returning extra money to stockholders. At Tuesday’s closing value, shares at expose yield a market-beating 2.73%.
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Disclosure: At the time of writing, I am long on the S&P 500, and the Nasdaq 100 thru the SPDR S&P 500 ETF (SPY), and the Invesco QQQ Have confidence ETF (QQQ). I am also long on the Know-how Make a selection Sector SPDR ETF (NYSE:XLK). I on a traditional foundation rebalance my portfolio of particular person shares and ETFs in accordance to ongoing threat evaluation of each the macroeconomic setting and companies' financials.
The views discussed in this text are fully the concept of the creator and can now now not be taken as investment recommendation.
