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The technology domain is synonymous with innovation and expansion, often birthing highly prized stocks. Powerhouses like Microsoft (NASDAQ:MSFT) and Nvidia (NASDAQ:NVDA) epitomize this sector. Nevertheless, a trove of tech stocks lurks beneath the surface, ready to break out and deliver value.
When these underestimated stocks surge, investors reap instant rewards. Fortunately, identifying such potential shares is not an arduous task. While value metrics serve as invaluable aids, investors should cast a wider net when on the prowl for bargains.
Thematic market trajectory and a stock’s alignment with such narratives are crucial considerations. Let’s delve into three overlooked stocks poised for a breakthrough.
Rejuvenation of Cisco Systems (CSCO)
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Cisco Systems (NASDAQ:CSCO) has embarked on a revitalization journey to fortify its business through recurring revenues. This initiative underpins its recent union with Splunk.
The transaction is forecast to inject $4.2 billion in annual recurring revenues into Cisco Systems’ coffers. On its own, CSCO generated $25 billion in yearly recurring revenues in the latest fiscal period. This acquisition propels Cisco Systems into a stronger position within the analytics and cybersecurity spheres.
Such a move is likely to bolster CSCO shares, known for their conservative appeal. The company’s transition is partly motivated by diminishing earnings and revenue in the last quarter.
Given CSCO’s attractive P/E ratio, it’s plausible to anticipate a surge in this metric after the Splunk deal as more lucrative software earnings come online.
Qualcomm’s (QCOM) Cash-Infused Growth
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Qualcomm (NASDAQ:QCOM) frequently tops discussions at the intersection of technology and income, flaunting a 2% dividend yield.
What’s more, Qualcomm appears undervalued in terms of price to free cash flow ratio. Its robust free cash flow signals multiple advantages. Firstly, Qualcomm’s capacity to churn out such cash is a boon with dividend payouts. Secondly, it implies the firm possesses ample liquidity post-all commitments, affording it operational flexibility.
Qualcomm’s cash reserves empower it to chase growth opportunities. This positions the company uniquely to offer investors income alongside avenues for growth.
Micron Technology’s (MU) Ascension
The Stealth Powerhouse: Micron Technology’s Rise in the Semiconductor Industry
Micron’s Strategic Move
Micron Technology (NASDAQ:MU) finds itself in the sweet spot of being undervalued and ready to storm the tech world. The ace up their sleeve? A crucial collaboration with Nvidia that aims to take the semiconductor market by storm.
The Race to the Top
As Micron ramps up mass production of high-bandwidth memory chips for Nvidia’s latest AI chips, their South Korean competitors – Samsung and SK Hynix – are feeling the heat. In a surprising turn of events, Samsung and SK Hynix have joined forces to counter Micron’s swift progress. Their move reeks of fear, highlighting the growing threat Micron poses to their dominance. With a technological edge over Samsung, Micron is poised to secure a pivotal role as a primary supplier to Nvidia, cementing its foothold in the industry.
American Advantage
What’s more, Micron’s American roots give it a leg up in the global tech race. Operating in the US has its perks, especially with a presidential election on the horizon. This geographical advantage sets Micron on a promising path towards greater recognition and influence in the industry.
On the date of publication, Alex Sirois 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.
