Technology stocks have outperformed other sectors since the turn of the year, collectively outpacing their nearest counterpart (financial services) by more than 2x. Although technology stocks can be cyclical, many are secular, meaning they possess the means to deliver returns throughout the economic cycle. As such, adding high-quality technology stocks to your portfolio is always a good idea.
Investing in technology ETFs is an option if you’re looking for low-risk exposure. However, cherry-picking is needed if you’re in search of alpha returns. Yet, selecting technology stocks is tricky because many are often priced in. This prompted me to embark on a journey to find underpriced technology stocks for my readers.
Here are three technology stocks to put $500 into by the end of the month.
Uber Technologies (UBER)
Uber Technologies (NYSE:UBER) currently trades at around $75 per share, making it an affordable stock to most investors. However, affordability isn’t the only reason I added UBER stock to the list; here’s why I’m bullish.
If you’re looking for secular growth, you’ve got it right here. Recent data shows that Uber’s mobility segment achieved $19.285 billion in fourth-quarter gross bookings, up by 29.5% year-over-year. Moreover, the company’s delivery segment reached around $17 billion in gross bookings during the quarter, 18.8% higher than a year before.
What do the aforementioned numbers tell us? It tells us that convenience is here to stay. In fact, Uber’s bookings surged in 2023 despite facing a topsy-turvy economy. I don’t see any reason why this trend would change. I mean, Uber has arguably corned the mobility and delivery markets, which are both in hypergrowth mode.
Lastly, key metrics suggest UBER stock is a growth-at-a-reasonable-price (GARP) opportunity. For example, UBER’s forward price-to-earnings-growth ratio of 0.8x implies that market participants underestimate its earnings-per-share growth rate.
You’re looking at a solid opportunity here!
Robinhood Markets (HOOD)
Robinhood (NASDAQ:HOOD) stock, which trades at around $17 per share, recently received a boost as Cabot Wealth included HOOD in its top ten list of stocks. Some might have reservations about HOOD stock as it is an asset with an elevated price-to-sales ratio of 8.27x. However, rest assured that HOOD stock’s fundamental prospects are improving.
A salient feature behind Robinhood’s success is retail investor participation. Fortunately, retail investor participation is recovering after being bruised by a bear market in 2022 and early 2023. According to the investor movement index, retail investor participation increased by 8.39% in March, reaching a notable level of 51.65. Moreover, VettaFi collated U.S. margin debt levels in February, stating that margin debt levels surged by 19% year-over-year but remained below a trend-line moving average.
The metrics mentioned above suggest that retail participation is increasing, but the question becomes: Is Robinhood benefiting from the increased participation? Well, Robinhood’s fourth-quarter earnings surprised as the company surpassed its revenue target by $18.22 million and its earnings-per-share target by four cents. This shows that Robinhood has benefitted from increased retail investor participation, which will likely continue, especially considering Robinhood’s recent expansion into the UK.
As mentioned before, HOOD stock faces value concerns. However, I’m willing to bet on systematic tailwinds!
Deliveroo (DROOF)
I’ll openly admit that Deliveroo (OTCMKTS:DROOF) is an anecdotal pick. Sure, DROOF stock possesses solid metrics. However, I picked this stock mainly due to my experience with the company’s services. More specifically, Deliveroo’s breadth of options, quality of vendors, and timely deliveries amazed me.
Deliveroo’s business model is highly scalable, as its freelancers often use affordable bicycles or light motorcycles. This allows broader coverage and high contractor uptake. Moreover, Deliveroo’s vendor selection focuses on quality rather than volume, adding to customer retention dynamics.
The UK-based Deliveroo released its full-year results in March, revealing top-line revenue of £85 million (approximately $109 million). Although its deliveries fell by 3% during the year, enhanced systemic features will likely see that figure improve in 2024.
The numbers speak for themselves, indicating that Deliveroo is in its early stages of growth. While it may not reach mammoth delivery volumes, Deliveroo has a strong case for secular profits. This bullish sentiment is not just mine, but also shared by HSBC (NYSE:HSBC), who recently upgraded Deliveroo’s stock to a Buy rating, citing an enhanced profitability outlook.
Lastly, Deliveroo looks good from a market-based vantage point. For example, Deliveroo’s forward price-to-sales ratio of 0.92x suggests the stock possesses absolute value. Moreover, Deliveroo recently ticked up above its 10-, 100-, and 200-day moving averages, indicating a trendline has formed.
On the date of publication, Steve Booyens did not hold (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.