Here at Zacks, we don't generally classify stocks as "cheap" or "expensive", and rather than looking at the stock's face value, we have a system that puts an emphasis on earnings estimate revisions to find stocks that will hopefully be winners for investors.
That being said, low-priced stocks can be attractive to smaller investors that can't necessarily afford large stakes in companies with higher priced stocks.
When looking at these low-priced stocks, we can look at the same trends in growth, value, and momentum and apply the Zacks Rank to properly analyze the potential that these companies have. We are also keenly aware of the latest sector trends and make sure to cover all of the hottest industries.
Today we've highlighted three stocks that fall into the broad "technology" sector. Each of these three stocks is currently trading for less than $10 per share and holds a Zacks Rank #2 (Buy) or better. Take a look at the strong estimate revision activity and other factors that make these companies stick out right now:
1. Ribbon Communications, Inc. ( RBBN )
Prior Close: $7.60
Ribbon Communications is a leading provider of voice infrastructure products for the new public network, and the company offers a variety of cloud-based, VoIP, and IP-based communications solutions. Formed by the merger of Sonus and GENBAND, Ribbon is expected to finish with full-year EPS growth of 22% and sales growth of 30%.
More impressively, that expansion is expected to continue, with current estimates calling for EPS growth of 25% and revenue growth of 90% next year. The company has also met or surpassed estimates in 10 consecutive quarters, and with a P/E ratio of 18.44, its valuation has not gotten out of hand. What's more, RBBN is sporting a Zacks Rank #1 (Strong Buy).
2. A10 Networks, Inc. ( ATEN )
Prior Close: $7.66
A10 Networks provides software-based networking solutions, enabling enterprises and government organizations to optimize the performance of their datacenter applications. To the delight of investors, management recently debuted a new software subscription model. This strategy has proven valuable throughout the industry and could be a catalyst to push this Zacks Rank #2 (Buy) even higher.
We also know that investors love to reward a company's first profits. A10 posted a surprise profit and crushed earnings estimates by 250% in its latest quarter, helping it move closer to consistent profitability. Earnings estimates have been on the rise since, and we expect EPS figures to swell by another 350% in the upcoming fiscal year. A10 is also nearly debt-free and has plenty of cash in hand, so it is in a strong financial position for a young tech company.
3. Pixelworks, Inc. ( PXLW )
Prior Close: $5.39
Pixelworks designs semiconductors and software that enable the visual display of broadband content through a wide variety of electronic devices. Currently, PXLW has a Zacks Rank #1 (Strong Buy) and is sporting "A" grades in the Growth and Momentum categories of our Style Scores system, making it a dynamic pick for different types of investors.
What's more, earnings estimates are on the rise, and the company has successfully surpassed estimates by an average of 150% in each of the trailing four quarters. Semiconductors are poised for more strength in 2018, and this could be an option for smaller investors looking to load up on shares in this industry.
A stock's market price is not a clear indicator of whether it is a good investment. However, the nice thing about the Zacks Rank is that it can be applied to stocks of any price. For smaller investors looking to find solid tech stocks at lower prices, this list is a great place to start.
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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report A10 Networks, Inc. (ATEN): Free Stock Analysis Report Pixelworks, Inc. (PXLW): Free Stock Analysis Report Sonus Networks, Inc. (RBBN): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research