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- The market’s recent tumble has opened up some very interesting opportunities with these six tech stocks to buy.
- HP Inc (HPQ): This PC company has a 2.8% dividend yield, a forward price-to-earnings ratio of 8.2x. It also has Buffett as a fan.
- Avnet (AVT): An electronics distributor with a 2.25% yield paid for the last eight years and a forward P/E of 7x.
- KT Corp (KT): Korean telecom with a 5.2% yield paid for the last six years and a forward P/E of 6.3x.
- United Microelectronics (UMC): Taiwan chipmaker with a prospective 4.4% yield, a dividend paid for the last 10 years and a 7.9x forward P/E.
- Qualcomm (QCOM): A major U.S. telecom chip designer with a 2.28% yield and a forward P/E of just 10x.
- Nvidia (NVDA): A major chip stock trading well below its average 40x forward P/E, now at just 30x.
These six tech stocks look like bargains now, as their prices seem to reflect a large recession. Most of these stocks feature very low price-to-earnings ratios compared to their past history. This makes them worth buying now.
Value investors don’t try to time markets. Instead, they try to take advantage of bargain opportunities like with these tech stocks.
HP Inc (HPQ)
HP Inc (NYSE:HPQ) is s a low-tech company that has a decent 2.8% yield. It also has a consistent buyback program. Its annual $1.00 dividend is 23% of its $4.26 earnings-per-share (EPS) forecast for 2022. Moreover, HP has produced 11 consecutive years of dividend increases, as well as 32 years of continuous dividend payments.
Based on analysts’ estimates, HPQ stock trades for just 8.4 times forward earnings estimates.
Warren Buffett likes HP and recently took a large 11.4% stake in the company. HPQ stock is likely to be one of the top tech stocks to own that pays a dividend and also has a P/E below 10x.
Avnet (NASDAQ:AVT) is an electronics distributor that pays a $1.04 dividend annually. This gives it a 2.25% dividend yield. Moreover, Avnet has paid a dividend annually for the past eight years.
Analysts forecast that it will make EPS of $6.85 this year, well more than the $1.04 dividend. Earnings will rise to $6.82 next year. So, at today’s prices, AVT stock trades at a forward P/E of just over 7x.
This is mainly due to the higher price of chips and other technology-related items, as well as higher logistics-related revenue. Avnet is one of the best cheap tech stocks to own that pay consistent dividends.
KT Corp (KT)
KT Corp (NYSE:KT) is a South Korean telecom operator. It also provides broadband services, as well as media and content services. These include IPTV, satellite TV, digital music, e-commerce, online advertising consulting and other related services.
KT Corp pays one annual dividend each year. It recently declared its dividend on April 27 for 75.47 cents. It does not go ex-dividend again until Dec. 30, 2022, when the next dividend is declared in May 2023. That gives it a dividend yield of 5.36% if the dividend next year is the same.
This is one of the few cases where the ex-dividend date is actually before the declaration date by four months. So if you buy the stock, assume its dividend will be close to the prior dividend.
The stock has a forward P/E of 6.3x, according to Seeking Alpha, and an 8.15x multiple according to Refinitiv. With its high dividend yield and low P/E, KT stock is one of the best tech stocks that bargain investors love.
United Microelectronics (UMC)
United Microelectronics (NYSE:UMC) is a foundry semiconductor chip manufacturer with plants throughout the world. Like KT Corp, it pays a dividend once a year. However, the ex-date is after the declaration date, not before like at KT stock. Usually, the ex-date is in mid-July, so there is still time to get in on this year’s dividend.
Last year the dividend was set at 28.66 cents, giving it a 3.35% dividend yield. This year it’s likely to be much higher. Here is why: Its dividend payout was 34.5%, so assuming its EPS hits $1.12 this year, the new dividend could be 38.64 cents. So at today’s price near $8.50, UMC stock has a prospective yield of 4.52%.
Moreover, UMC stock has a forward P/E of just 7.6x. That makes it one of the best tech stocks for bargain-focused investors.
Qualcomm (NASDAQ:QCOM) is a mobile technology firm with a huge patent portfolio and high earnings power. Analysts forecast $12.59 in EPS this year, up 47.4% over last year.
And for next year they estimate 5% higher earnings at $13.19. At today’s price, this gives QCOM a forward P/E of just 10.75x.
Moreover, the dividend of $3 per share is less than a quarter of the $12.59 earnings forecast for this year. At today’s price it has a 2.28% dividend yield.
Qualcomm has paid a dividend in each of the past 18 years. This makes it very likely that the company will keep doing this even if there is a recession. This makes it one of the best tech stocks to own with a low P/E and a good dividend yield.
Nvidia (NASDAQ:NVDA) is a graphics chip and AI technology company. It is cheap at just 30x forward earnings. Moreover, its average forward P/E over the past five years has been 40x.
Moreover, its earnings are forecast to rise 27% from $4.44 in earnings per share (EPS) last year to $5.65 in 2022. And for 2023, 37 analysts surveyed by Refinitiv forecast an average EPS of $6.74. This represents a forward growth rate of 19.2% next year.
Based on my analysis, this provides a potential 30% upside. However, investors should also pay attention to the company’s upcoming May 25 earnings results. They will want to see if the company is still positive on its earnings growth. Given that analysts expect positive earnings for this year and next, this makes the stock one of the best of the tech stocks on this list.
On the date of publication, Mark Hake did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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