Some of the technology sector’s biggest names captured much of the renewed investor enthusiasm, leaving small- and mid-cap companies in the dust. However, if you dig deep enough you’ll still find severely oversold tech stocks. To help us find them, I’ll use the relative strength index (RSI) to identify some of those still considered oversold. Usually, an RSI hovering around 30 or below indicates oversold status. At the same time, we’ll look to see whether the oversold conditions are warranted – or represent a perfect buying opportunity.
Oversold Tech Stocks: PayPal (PYPL)
Pioneering fintech company PayPal (NASDAQ:PYPL) is having a rough year. Although its recent earnings report fell short of estimates, PayPal’s industry dominance is still strong. PayPal maintains 41% of the global online payment processing market, with second-place competitor Stripe holding a measly 21%.
Furthermore, PayPal’s financials remain solid and sustainable, even if not spectacular. Missing analyst estimates, PayPal nevertheless reported a respectable 7% year-over-year uptick in revenue, a 2% margin increase, and an 11% reduction in non-operating expenses.
As the digital payment landscape evolves, PayPal remains a major player with its wide-reaching user base and established infrastructure. Factors such as the increasing preference for cashless transactions and the growing eCommerce market underscore the company’s long-term growth potential. Furthermore, PayPal’s recent stablecoin entry in the crypto markets ensures the fintech giant remains on a forward technological footing.
L3Harris Technologies (LHX)
Notably, L3Harris hit a solid 13% year-over-year increase in sales, reflecting its ability to navigate challenging market conditions and remain dominant amid changing market conditions. The company’s strategic foresight will also pay dividends after successfully finalizing its Aerojet Rocketdyne acquisition.
That acquisition is already paying off, as Aerojet Rocketdyne is among the most important players in the emerging space technology sector. For example, the company builds thrusters for NASA’s Orion project and high-altitude ballistic defense components. Under L3 Harris, the aerospace company will have greater access to new contracts alongside expanded logistic and manufacturing networks. Considering current stability and long-term outlook, the stock’s recent downturn is a viable entry point for this oversold stock.
Oversold Tech Stocks: Paycom Software (PAYC)
Paycom Software (NYSE:PAYC) is an online provider of payroll and human resource technology solutions that’s having trouble in today’s tighter labor market. While the stock is down 7% this year, recent developments paint an optimistic picture. In fact, the company’s second-quarter earnings outperformed expectations, showcasing its emerging adaptation to changing economic conditions.
Looking ahead, the future appears promising for Paycom. Management projections indicate significant earnings growth in the next few years, reflecting the company’s strategic positioning in a dynamic market. Additionally, their expectations point to increased cash flows and share values.
Robust quarterly performance and optimistic future forecasts suggest Paycom could rebound from its recent dip. As organizations increasingly adopt digital payroll and HR management solutions, the company’s offerings remain relevant and essential – and oversold. For investors assessing opportunities in the tech sector, Paycom could be a tremendous oversold stock to consider.
With back-to-school season here again, oversold EdTech company Chegg (NYSE:CHGG) is ready to capitalize on a wave of new and returning college students. Best known for its textbook rental service, Chegg’s stock is down 60% year-to-date. Still, there’s an upside for investors as Chegg explores more innovative products and expands past its current product offerings.
Chegg is jumping on the AI craze and will soon unveil an AI-powered homework tool. The new venture “will combine the best of generative AI with Chegg’s proprietary high-quality content and demonstrated ability to help improve student outcomes.” With many attributing the year’s tech resurgence to AI-powered enthusiasm, Chegg’s new move may serve to bring the EdTech giant back up to speed with the broader market.
In addition to its AI-focused product, Chegg signaled its commitment to shareholder loyalty through a new buyback program. As Chegg continues to evolve and explore AI-driven possibilities in the education sector, investors interested in education technology and innovation could find the company’s trajectory worth monitoring. With the company’s sell-off this year now could be an excellent time to consider this oversold EdTech stock.
Oversold Tech Stocks: ChargePoint (CHPT)
ChargePoint (NYSE:CHPT) fell 22% since Jan. That dip may be surprising, considering the broad electric vehicle (EV) market jumped 35% this year. The disparity between the two indicates that ChargePoint is oversold and poised for a comeback. As companies adapt to and surpass, restricted supply lines, a new EV rush will soon hit the roads and make ChargePoint a critical part of national (and global) infrastructure.
Further growth opportunities also stem from expanding subscriptions as customers seek convenient and affordable charging solutions. This, coupled with the company’s recent performance, outperforming its earnings estimates, underscores its potential.
Impressively, ChargePoint’s revenue surged by 57% year-over-year, reflecting the company’s ability to capitalize on the EV market. ChargePoint’s extensive charging network and revenue growth could attract investor interest as the world continues to transition toward sustainable transportation solutions.
Keysight Technologies (KEYS)
Keysight Technologies (NYSE:KEYS) is a diverse, and oversold, electronic test and measurement equipment manufacturer with an array of diversified software solutions. The company has faced a challenging year, with its stock dropping 24%.
In its recent earnings report, Keysight blew away expectations, but the stock took a hit based on a cautious outlook. While Keysight’s stock price has suffered, it’s important to consider the broader context. The field of electronics testing and measurement is vital for a wide range of industries, including telecommunications, electronics manufacturing, and research. Keysight’s products are crucial in ensuring the quality and reliability of electronic devices and technologies, and the demand for these solutions remains steady.
Investors evaluating Keysight should consider its strong track record in the industry, its ability to innovate and adapt to changing technological landscapes, and the fundamental importance of its products. Short-term market sentiments influence the company’s recent stock performance. Still, its foundational role within the electronics sector indicates potential for recovery and growth as market conditions evolve.
Microchip Technology Inc (MCHP)
Microchip Technology Inc (NASDAQ:MCHP) is a key player in the electronics industry, specializing in producing microcontrollers, mixed-signal, analog, and Flash-IP integrated circuits. Notably, the stock has displayed a positive trajectory, marking a 14% increase in value YTD.
The company recently beat analysts’ expectations in the latest quarter. Institutional investors are taking advantage of the strong performance and oversold status, with one financial service firm buying $4.8 million worth of stock. Despite the challenges posed by the economic climate, Microchip remains optimistic about its growth prospects for the upcoming quarter. This resilience underscores its strategic agility and ability to navigate market fluctuations.
Finally, Microchip’s position as an AI stock warrants attention. As industries increasingly integrate AI solutions, the demand for specialized microcontrollers and integrated circuits is expected to rise. Ultimately, investors should consider its consistent growth, financial stability, and potential for future expansion in emerging technology sectors.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.