The growth portion of the market is on fire right now. From mega-cap tech stocks on down through more speculative names in fields such as AI, electric vehicles, and space technologies, investors are taking shots at potential big winners. It’s not too late to hop on the trend. There are still cheap tech stocks out there today. Specifically, these seven budget-friendly tech investments all hold high growth potential and are selling for $25 per share or less today.
Cheap Tech Stocks: United Microelectronics (UMC)
United Microelectronics (NYSE:UMC) is a Taiwanese semiconductor foundry company. While it is far from the largest player in the foundry space, the rising tide in the semiconductor industry has been lifting almost all boats. To that point, United Microelectronics has grown its revenues from $4.9 billion in 2018 to $9.1 billion last year. That said, the chip industry is currently facing a severe slowdown in some areas such as memory and graphics processing units. As a result, United Microelectronics has seen a notable decline in results this year, with revenues projected to drop to $7.1 billion for the full-year 2023.
UMC stock has dipped about 15% from its recent peak amid the ongoing weakness in the sector. This has created a bargain opportunity, with UMC stock selling for just 10 times forward earnings. Additionally, the company should return to double-digit revenue growth in 2024, as the AI chip boom snaps the industry out of its current slump.
Cheap Tech Stocks: Ericsson (ERIC)
Ericsson (NASDAQ:ERIC) is a leading producer of networking equipment for telecom applications. As one of the top cheap tech stocks, the company plays a major role in producing next-gen infrastructure products, such as the equipment for deploying 5G networks. Broadly speaking, 5G has failed to take off quite as quickly as analysts had hoped. In addition, some telecom companies have cut back their spending plans amid a slowdown in new customer signups.
That said, the need for more telecom data isn’t going anywhere. Smartphones continue to demand more and more connectivity and additional use cases such as connected cars will put further demand on the network. Ericsson will find plenty of demand for its products going forward, especially as many customers shy away from Chinese competitors due to security risks. All this makes ERIC stock a solid buy on its recent dip.
Lightspeed Commerce (LSPD)
Lightspeed Commerce (NYSE:LSPD) is a software company focused on retail. It provides solutions such as payments, operations support, and managing customer experience for retail stores and restaurants.
Analysts often compare the company to Shopify (NYSE:SHOP) and they indeed had a similar trajectory over the past few years. Traders initially bid LSPD stock up dramatically as adoption soared with folks stuck and home and turning to online ordering.
This momentum has reversed, though, and Lightspeed stock has gotten crushed. The actual business is doing better than the stock price would suggest, however. Prior to the onset of the pandemic, Lightspeed generated $77 million in revenues for the fiscal year ending March 2019. This exploded to $731 million in the fiscal year ending March 2023.
And the growth is far from over; analysts see revenues surging another 22% this year to $890 million in the next fiscal year. The consensus forecast has Lightspeed reaching EPS profitability this year as well. All this to say that while LSPD stock collapsed with the end of the online ordering boom, the business is still in good shape and investors can own Lightspeed at a big discount today.
StoneCo (STNE)
StoneCo (NASDAQ:STNE) is a financial services company focused on payments software. Its proprietary technology facilitates commerce in an omnichannel manner covering in-store, online, and through mobile apps. More than 2.5 million clients, mostly small- and mid-sized firms, use StoneCo for payment processing and related services.
StoneCo attracted esteemed investors including Warren Buffett’s Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) and shares flew higher during the height of the online shopping boom in 2020. However, like with Lightspeed Commerce, the good times didn’t last long for STNE stock. Shares would crash as much as 90% from their all-time highs.
While StoneCo may be down, it isn’t out. The firm remains highly profitable; in fact, it is selling for less than 20 times forward earnings, and analysts expect double-digit revenue and earnings growth going forward. On top of that, Brazil’s central bank is set to start cutting interest rates should help stimulate the economy.
Celestica (CLS)
Celestica (NYSE:CLS) is an information technology company that provides cloud-based solutions focused on supply chains and logistics. CLS stock rocketed more than 30% higher recently on a much better-than-expected earnings report. This could be just the beginning.
Even after the big jump, Celestica shares are going for just 9 times forward earnings. And that’s with earnings that are in highly attractive categories. The company is a big player in the data centers and hyper-scaler markets. With AI spending being a huge tailwind for these categories going forward, Celestica should enjoy an exponential jump in its business activity.
We’ve already seen the first wave of AI stocks blast off. Now appears to be the time for the second wave of AI plays that sell infrastructure to commercial AI operators to have their run, and that bodes well for Celestica. RBC Capital agrees, it just gave Celestica a double upgrade last week on its rapidly improving outlook.
Despegar.com (DESP)
Despegar.com (NYSE:DESP) is Latin America’s leading online travel agent. Founded in Argentina, Despegar is now the largest player in its home market and in other geographies such as Brazil and Colombia. Understandably, the company’s net income veered sharply into negative territory since 2020 as the fall in travel demand hit Despegar hard. But the company is back on the upswing. Revenues are expected to top pre-pandemic levels for full-year 2023, and the company is set to return to profitability on an earnings-per-share basis as well.
In the longer term, Despegar should have much stronger growth prospects than travel companies in developed markets. The Latin American consumer currently goes on fewer and less costly vacations than the average American or European, leaving plenty of opportunity as their incomes grow. The boom in commodity prices should drive a great deal of economic growth in key Despegar markets like Argentina and Brazil which will power further upside.
Agora (API)
Agora (NASDAQ:API) is a software company that operates a real-time engagement platform-as-a-service (PaaS) ecosystem. The company’s platform allows clients to embed real-time voice, video, text, chat, and other types of engagement into apps and websites.
Agora stock rose to prominence several years ago when it was picked up by several hot applications such as live audio service Clubhouse. But as Clubhouse and other 2021-era apps faded in popularity, API stock sank with it. Agora had grown revenues from $44 million in 2018 to $168 million in 2021, but that has now dropped to a projected $149 million this year.
That’s not good, of course, but the market has dramatically overreacted. Agora is now selling at a market capitalization of just $325 million. Meanwhile, Agora has more than $400 million of cash on its balance sheet. Investors are getting the whole operating business for less than a zero valuation after backing out the firm’s cash.
Agora is losing money, but not at an excessive rate. Meanwhile, analysts project that Agora will return to double-digit revenue growth in 2024. That makes API stock a most interesting situation with shares selling at a sizable discount to the value of its cash per share.
On the date of publication, Ian Bezek held a long position in DESP, BRK-B, and STNE stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
