While boring but safe industries look quite compelling amid the rancorous noise of the banking sector fallout and the ever-present concern of high inflation, investors will to take some risks may want to consider solid technology stocks to buy for consistent or credible returns. As leading innovators, these enterprises may eventually find traction, thus leading to upside returns.
To generate this list, I looked at two metrics: technology stocks to buy that featured attractive valuation propositions against earnings and/or sales and strong analyst support. The latter attribute is self-explanatory. For the former, investors are hungry for a good deal during these challenging times. Therefore, enticing discounts may attract a higher volume of buyers.
| SMCI | Super Micro Computer | $106.55 |
| QCOM | Qualcomm | $127.58 |
| DIOD | Diodes | $92.76 |
| STM | STMicroelectronics | $53.49 |
| KLIC | Kulicke and Soffa | $52.69 |
| SIMO | Silicon Motion Technology | $65.52 |
| SMTC | Semtech | $24.14 |
Super Micro Computer (SMCI)
Doing business as Supermicro, Super Micro Computer (NASDAQ:SMCI) is an information technology (IT) company. Specifically, the enterprise provides high-performance and high-efficiency servers, server management software, and storage systems for various markets. Since the beginning of the new year, SMCI gained 26% of its equity value. Notably, in the trailing one-year period, it’s up 167%.
On paper, such an outperformance might suggest that shares are overvalued. However, at the moment, the market prices SMCI at a trailing multiple of 10.04. As a discount to earnings, Super Micro ranks better than 75.54% of the competition.
Operationally, the company benefits from a three-year revenue growth rate of 12.7% (above 73.73% of the industry) and a net margin of 8.7% (beating out 72.47% of its peers). As well, the company enjoys stability in the balance sheet, with an Altman Z-Score of 6.82 indicating low bankruptcy risk. Finally, Wall Street analysts peg SMCI as a consensus moderate buy. Their average price target comes out to $122, implying over 15% upside potential. Therefore, it’s a reasonable idea among technology stocks to buy.
Qualcomm (QCOM)
A multinational corporation, Qualcomm (NASDAQ:QCOM) ranks among the biggest technology stocks to buy. Per its public profile, Qualcomm creates semiconductors, software, and services related to wireless technology. Since the Jan. opener, QCOM gained nearly 17% of its equity value. It’s still recovering, though, from the 2022 tech sector fallout. In the trailing year, it’s down 18%.
Still, patience may be key for Qualcomm. In terms of valuation, the market prices QCOM at a trailing multiple of 12.06. As a discount to earnings, the company ranks better than 70.17% of sector peers. As well, the enterprise commands a net margin of 27.4%, beating out 90% of the field.
On the top line, Qualcomm’s three-year revenue growth rate pings at 25%, exceeding 81.15% of the industry. Also, its book growth rate during the same period comes out to a stout 55.3%. Lastly, covering analysts peg QCOM as a consensus moderate buy. Their average price target hits $145.80, implying almost 17% upside potential.
Diodes (DIOD)
A global manufacturer and supplier of application-specific standard products, Diodes (NASDAQ:DIOD) serves the discrete, logic, analog, and mixed-signal semiconductor markets. In terms of industry, Diodes covers electronics, computing, communications, industrial and automotive. Since the Jan. opener, DIOD gained 20% of its equity value. In the past one-year period, it’s up a little over 1%.
Moving forward, DIOD may have additional room to run. For example, the market prices DIOD at a trailing multiple of 12.67. As a discount to earnings, the semiconductor firm ranks better than 68.77% of competing technology stocks to buy. Also, DIOD trades at 1.33 times the projected free cash flow (FCF). In contrast, the sector median value is 1.59 times.
On the operational front, Diodes features a three-year revenue growth rate of 21.7%. Also, its net margin is 16.56%. Both stats rank in the upper half of the underlying industry. In closing, analysts peg DIOD as a consensus strong buy. Their average price target stands at $107.60, implying nearly 18% upside potential.
STMicroelectronics (STM)
Based in Switzerland, STMicroelectronics (NYSE:STM) is a global semiconductor company. Specifically, it focuses on microchips that operators will embed in the most advanced solutions. Naturally, the relevance of STM centers on its everyday utility that we take for granted. Since the January opener, shares gained 46% of equity value. What’s more, in the past 365 days, they’re up 15%.
Although it’s one of the top-performing technology stocks to buy, STM may have additional room to run. Notably, the market prices STM at a forward multiple of 12.19 times. As a discount to projected earnings, STM ranks better than 86.57% of the field.
Operationally, STMicroelectronics features a three-year revenue growth rate of 19.1% and a net margin of 24.6%. Both stats – particularly the latter – rank in the underlying sector’s top half. Also, the company benefits from an Altman Z-Score of 6.07, reflecting better-than-average stability. Turning to Wall Street, analysts peg STM as a consensus moderate buy. Their average price target stands at $61.20, implying nearly 19% upside potential.
Kulicke & Soffa Industries (KLIC)
Hailing from Singapore, Kulicke & Soffa Industries (NASDAQ:KLIC) is an unsung hero among technology stocks to buy. As a leading provider of semiconductor, LED, and electronic assembly solutions, Kulicke undergirds various innovations. Since the start of the year, KLIC gained almost 21% of its equity value. However, it’s still underappreciated on a trailing-year basis, losing 8%.
Still, KLIC belongs on your radar of technology stocks to buy. Primarily, the market prices KLIC at a trailing multiple of 9.97. As a discount to earnings, KLIC ranks better than 79% of the semiconductors industry. Also, it trades at 8.95 times FCF. In contrast, the sector median value is 22.95 times. Operationally, Kulicke features a three-year revenue growth rate of 44.2%, above 93.52% of the underlying sector. Also, its net margin pings at 25.8%, outpacing 87.62% of the competition.
Looking to the Street, covering analysts peg KLIC as a consensus moderate buy. Their average price target comes out to $62.50, implying upside potential of almost 21%.
Silicon Motion Technology (SIMO)
Based in Taiwan, Silicon Motion Technology (NASDAQ:SIMO) focuses on developing NAND flash controller integrated circuits for solid-state storage devices. Its products are found in commercial, enterprise, and industrial applications. Since the Jan. opener, SIMO gained a modest but contextually respectable 2.4%. However, in the past one-year period, it’s down nearly 5%.
Nevertheless, SIMO might make for an interesting example of technology stocks to buy. Right now, the market prices SIMO at a trailing sales multiple of 1.41. As a discount to revenue, the company ranks better than 70.53% of sector peers. Also, shares trade at a forward multiple of 14.59. In contrast, the sector median value is 20.6 times.
Conspicuously, Silicon Motion commands excellent strengths in the balance sheet, featuring zero debt. In addition, the company’s Altman Z-Score of 8.05 indicates a very low bankruptcy risk. Finally, covering analysts peg SIMO as a consensus strong buy. Their average price target hits $85, implying over 29% upside potential.
Semtech (SMTC)
A chip manufacturer, Semtech (NASDAQ:SMTC) focuses on supplying analog and mixed-signal semiconductors and advanced algorithms for consumer, enterprise computing, communications, and industrial end-markets. Since the beginning of 2023, SMTC moved up 11%. However, it struggles badly on a trailing-year basis, giving up almost 55% of equity value.
For those with a strong heart, however, SMTC could be an interesting idea for technology stocks to buy. Mainly, the market prices SMTC at a forward multiple of 15.42. As a discount to projected earnings, Semtech ranks better than 70.15% of the competition. Also, shares trade at 12.44 times FCF. In contrast, the sector median value is 22.95 times. Semtech generally features a stable profile, with an Altman Z-Score of 4.15. Additionally, it’s a profitable enterprise with a net margin of nearly 19%.
Lastly, analysts peg SMTC as a consensus strong buy. Their average price target comes out to $48.50, implying 51% upside potential.
On the date of publication, Josh Enomoto 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.