3 Cheap Tech Stocks Under $10 to Buy During Q2 Earnings Season
U.S. stocks fell through morning trading Thursday after Chinese stocks took their biggest hit in over five months. The downturn comes as Wall Street wrestles with how to interpret the signs of economic recovery against growing worries about spikes in coronavirus cases.
For instance, U.S. retail sales jumped 7.5% in June to top expectations. Meanwhile, jobless claims remain elevated even though they continue to trend in the right direction. On top of that, headlines continue to pour in about spikes of coronavirus cases throughout the U.S., including in major economic hubs such as Texas and California.
Despite real concerns, the Nasdaq rests near its recent highs, as big-tech such as Apple AAPL, Microsoft MSFT, Amazon AMZN, and others prove more immune to the coronavirus economic downturn. And it’s hard to think the political will for another broad-based lockdown exists, unless things turn far worse.
Therefore, Wall Street might be poised to remain in don’t fight the Fed mode even if we face a near-term pullback as second quarter earnings results roll in.
So let’s look at three “cheap” stocks from the broader technology space that are trading under $10 a share that investors might want to buy…
iClick Interactive Asia Group Limited ICLK
Prior Close: $5.43 USD
IClick Interactive provides online marketing and enterprise data solutions and it boasts that it connects “marketers worldwide to the right audience in China and beyond.” The firm, which was founded in 2009 in Hong Kong and was listed on the Nasdaq in late 2017, works with many global brands to help provide key exposure in the expanding Chinese market, where it claims it’s able to reach “98% of China Internet users.” ICLK in late May posted its second straight quarter of adjusted net income to top our Q1 earnings estimate, while its revenue jumped 25%.
The digital marketing firm pointed to the strength within its newer and higher-margin Enterprise Solutions segment. IClick also reiterated its 2020 revenue outlook and upped its adjusted EBITDA guidance, despite coronavirus uncertainty. This showcased stability and long-term appeal because digital marketing is the last frontier for advertisers as print dies and people cut the cord to avoid ads on streaming services like Netflix NFLX.
Our current Zacks estimates call for iClick’s fiscal 2020 sales to jump 25% to $249.07 million to match FY19’s growth. Plus, the firm is expected to swing from an adjusted loss of -$0.04 per share in 2019 to +$0.02 this year, before jumping to +$0.04 in FY21. ICLK’s positive earnings revisions help it hold a Zacks Rank #2 (Buy) right now, alongside its “B” grades for Growth and Value in our Style Scores system.
ICLK shares have jumped over 60% in 2020 and 45% in the last year. Yet the stock still rests below its 52-week highs and roughly 45% off its all-time highs of over $9 per share that it hit in late 2017. This could give the stock room to run as it expands both its top and bottom lines during these uncertain times. As of now, iClick is expected to report its Q2 results in late August.
Zix Corporation ZIXI
Prior Close: $6.41 USD
Zix is an email security firm that specializes in email encryption, data loss and threat protection, and more. ZIXI is currently a Zacks Rank #2 (Buy) that sports “A” grades for Growth and Momentum, as well as a “B” for Value. The cloud email security solutions provider is also part of an industry that rests in the top 25% of our more than 250 Zacks industries.
The firm stands to benefit from the ongoing need for cybersecurity. “The COVID-19 pandemic is accelerating digital transformation and is increasing the need for robust business communications solutions that ensure organizations remain secure, compliant and productive,” CEO David Wagner said in prepared Q1 remarks.
ZIXI shares have soared over 90% since March 18, but they have cooled off recently. The stock currently rests 30% off the highs it reached last July. This might set up a better buying opportunity and help provide a potential springboard if the firm is able to impress Wall Street with its second quarter 2020 results due out on August 5. Along with its cheap price, Zix trades at a huge discount against its industry in terms of forward 12-month sales at 1.6X vs. 7.1X.
The company’s second quarter revenue is projected to jump 14.4%, with its FY20 sales expected to climb over 23%. Better still, ZIXI’s adjusted quarterly earnings are expected to surge over 27%, with its full-year EPS figure set to soar 138% higher to $0.57 a share. The email security firm’s earnings and revenue are expected to continue to grow in 2021 as well, as cybersecurity threats rise.
Limelight Networks, Inc. LLNW
Prior Close: $7.12 USD
Limelight provides digital content delivery, video, cloud security, and edge computing services. The Scottsdale, Arizona-based firm allows its customers to deliver streaming video and other digital content to “any device, anywhere.” Limelight’s offerings are geared toward industries from media and broadcasting to gaming and more. This makes it a potentially attractive long-term bet on the future of entrainment, as well as near-term term coronavirus play.
LLNW posted stronger-than-expected Q1 earnings in late April, with revenue up 32%. CEO Robert Lento said in prepared remarks that it was carrying momentum into Q2, “primarily driven by the increase of video-on-demand.” LLNW shares have skyrocketed roughly 150% in the last 12 months from under $2.50 per share to their current price. This run includes a 75% climb during the market’s coronavirus comeback.
Even though its stock has climbed and outpaced its industry over the last year, Limelight trades at 3.5X forward 12-month sales to come in at a serious discount against its industry’s 7.1X average.
Moving on, our Zacks estimates call for Limelight’s Q2 revenue to jump over 24%, with its FY20 sales projected to climb 16.4% to blow by last year’s 3%. Plus, Limelight is expected to soar from an adjusted loss of -$0.02 in FY19 to +$0.06 a share in FY20. And its bottom-line is projected to soar another 92% higher to $0.12 per share in FY21. Limelight holds a Zacks Rank #2 (Buy) right now, heading into the release of its second quarter results on Monday, July 20.
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