3 Value Tech Stocks Ripe for the Picking


  • “Value tech stock” isn’t a misnomer for these three companies.
  • News Corp (NWSA): A pivot toward digitization and recurring revenue is saving the legacy media giant.
  • Intuitive Surgical (ISRG): ISRG plans to launch its next-gen robotics platform this year.
  • Nintendo (NTDOY,NTDOF): Nintendo is finally capitalizing on a vast IP catalog.

value tech stocks - 3 Value Tech Stocks Ripe for the Picking

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The phrase “value tech stocks” almost seems like an oxymoron—value stocks tend to be stable, mature and slow to grow. On the flip side, even the largest tech stocks like Tesla (NASDAQ:TSLA) tend to focus on growth at all costs while trading at higher multiples than typically seen in value stocks. Even tech stocks offering dividends, a hallmark of value investing, tend to devote less capital to the initiative than they do to growth and have expectedly low yields as a result. For example, Meta’s (NASDAQ:META) recently announced dividend represents a meager 0.41% yield, and Apple’s (NASDAQ:AAPL) isn’t much better at 0.53%.

But these value tech stocks buck the trend while straddling the fine lines between maturity, expansion, innovation and reliance on existing revenue drivers. Each is dominant in their respective fields but, not content to rest on their laurels. Each is also aggressively expanding while exploring new income opportunities.

News Corp (NWSA)

Finding a legacy media stock like News Corp (NASDAQ:NWSA) on a list of value tech stocks seems counterintuitive. Legacy media sources, like newspapers, books and cable television, were once News Corp’s bread and butter. But today, Americans are increasingly moving toward next-gen media consumption. In a surprising move, NWSA is one of the few legacy media stocks effectively navigating the transition, unlike, say, Warner Bros Discovery’s (NASDAQ:WBD) ill-fated HBO Max transition.

To be fair, some of the pressure forcing NWSA’s adaptation is the recent inclusion of activist investor firm Starboard Value snagging a “sizable” stake in the company. Since then, NWSA added 3% to quarterly revenue year-over-year and a whopping 94% to net income. CEO Robert Thomson attributes the improved top- and bottom-line stats to “our strategic shift to digital and subscription revenues, and away from sometimes volatile advertising revenues.” In effect, NWSA follows the lead that many software-based value tech stocks set when prioritizing recurring revenue (at a seemingly lower price point) over a one-time or intermittent larger payoff. In this case, NWSA is swapping digital subscriptions for high-spend ad accounts, just as value tech stocks like Adobe (NASDAQ:ADBE) charge users a few bucks monthly for Photoshop rather than hundreds upfront.

Thus far, the strategy is paying off as the company also focuses on more niche markets, including top-performing segments like Dow Jones and its range of digital real estate services. NWSA is reducing its emphasis on dividends, for now, as it right-sizes operations to adapt to changing trends, but the company still offers a modest 1.55% total yield.

Intuitive Surgical (ISRG)

Intuitive Surgical (NASDAQ:ISRG) stands out among the top value tech stocks because, in many ways, it embodies the apparent contradiction between “value” and “tech.” The company, a member of both the S&P 500 and NASDAQ-100, is one of the stablest and largest medical hardware manufacturers. But, whereas competitors tend to offer a steady but boring suite of medical hardware, ISRG brings robotics and automation to the operating room in an aggressively high-tech, high-growth business model.

ISRG is accelerating its global expansion as post-pandemic fatigue wears off within the wider healthcare ecosystem. The last quarterly report saw global da Vinci procedures (ISRG’s proprietary robotic surgery platform) grow 21% year-over-year (YoY), and new da Vinci installations grow 14%. But, reinforcing the value thesis, ISRG also reported a 17% sales bump and nearly doubled net income to $606 million from $325 million.

Investors should keep an eye on this value tech stock as management hopes to release its next-gen da Vinci platform sometime this year that boasts “10,000 times the processing power to gather data, improve sensing and deliver better digital and analytic performance [compared to current models]” according to CEO Gary Guthart.

Nintendo (NTDOY, NTDOF)

Nintendo (OTCMKTS:NTDOY,OTCMKTS:NTDOF) is one of those rare value tech stocks with solid financials, an unassailable customer base and a massive range of untapped moneymaking opportunities. The Japanese stock is already on a record run, returning 50% over the past year despite a slowdown in recent weeks after alleged delayed hardware delivery timelines. But the slight slump won’t last long and, practically speaking, represents a great opportunity to jump in before the next leg up.

Bullish rumors continue swirling around Nintendo stock, including last year’s rumored Google (NASDAQ:GOOG,NASDAQ:GOOGL) collaboration to build tomorrow’s virtual reality headset, as well as revelations that Microsoft (NASDAQ:MSFT) seriously considered acquiring the Japanese game maker. But rumors and innuendo aside, plenty is propping up Nintendo’s value tech stock momentum.

Most notably, after The Super Mario Bros Movie shocked box offices last year with $1.4 billion in ticket sales, Nintendo is finally opening up its massive, 193-property strong IP catalog to franchising and monetization. First up is a silver-screen Zelda adaptation that could easily dwarf Mario’s performance. If that’s the case, expect the floodwaters to open – and Nintendo stock to inch higher to the recent 11% price target upgrade by one analyst.

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.

Jeremy Flint, an MBA graduate and skilled finance writer, excels in content strategy for wealth managers and investment funds. Passionate about simplifying complex market concepts, he focuses on fixed-income investing, alternative investments, economic analysis, and the oil, gas, and utilities sectors. Jeremy’s work can also be found at www.jeremyflint.work.

Article printed from InvestorPlace Media, https://investorplace.com/2024/02/3-value-tech-stocks-ripe-for-the-picking/.

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