The Nasdaq Composite has been on a strong rally in 2023. Today, the famous tech-heavy index is down 10% from its recent high, but on a year-to-date basis, the index has gained more than 22% year-to-date, outperforming its peers, the S&P 500 and the Dow Jones Industrial Average. This downturn has led to the emergence of these cheap tech stocks.
However, a sustained rally amongst several tech stocks implies that many have become grossly overvalued. Thus, it is important for investors to be selective and look for tech stocks that offer attractive valuations, solid fundamentals, and competitive advantages.
Below are three cheap tech stocks that are worth buying now.
First Solar (FSLR)
Though First Solar (NASDAQ:FSLR) is a solar panel manufacturer, the company’s unique thin-film technology, which offers lower costs and higher efficiency than conventional silicon-based panels, is on this list. Being vertically integrated, First Solar can control each step of the production process, from manufacturing the solar panels to providing end-to-end solar systems. This vertical integration allows the company to maintain quality control, reduce costs, and ensure a seamless process for its customers on a global scale.
Several secular trends have driven First Solar’s growth over the past decade, including a broader shift to renewable energy and, most recently, the Inflation Reduction Act of August 2022, which extended the federal investment tax credit (ITC) for solar projects to 26% through 2025. The company’s second-quarter results saw First Solar reporting more robust year-over-year revenue growth and EPS, indicating there is still a lot of demand out there for its core products.
While First Solar is trading at only 14.2x forward earnings, investors wanting to make a promising solar stock investment in 2023 should be interested.
Kyndryl Holdings (KD)
Spun off from IBM (NYSE:IBM) in November 2021, Kyndryl Holdings (NYSE:KD) is a relatively new company with much potential. The company provides managed infrastructure services to enterprise customers across various industries and regions. The company aims to help its clients modernize their IT systems and optimize their costs while also enhancing their security.
Kyndryl is undervalued from a profitability perspective. Currently, the IT infrastructure services company trades at 2.8x forward EBITDA. While the technology services sector, in general, has had a tough time this year in terms of acquiring new clients and expanding wallet share with existing customers, these characteristics of the current macro environment will not remain that way for long. Therefore, investors should be eager to jump on Kyndryl’s shares while its valuation remains cheap.
InterDigital (NASDAQ:IDCC) is a leading innovator and licensor of wireless technologies, such as 5G, Wi-Fi, and IoT. The company owns over 27,500 patents and patent applications worldwide, covering key aspects of wireless communications and networking. InterDigital generates revenue by licensing its patents to device manufacturers, network operators, and platform providers.
The company has a high-margin and cash-generative business model, which incurs minimal operating expenses and capital expenditures. InterDigital has generated $535.8 million in revenue over the last twelve months. Margins have also been strong, hovering above 85% for the past two quarters. Lastly, InterDigital trades 9.0x forward EBITDA, which should be attractive to investors as trading multiples have already appreciated so much since the beginning of the year.
On the date of publication, Tyrik Torres did not have (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.