2 best value technology stocks to buy now
Tech stocks and value don’t go together very well. Nowadays, IT companies can increase their income by making amazing numbers in a very short time due to the ease of scale and capitalization. So the shares of these companies are starting to trade at ridiculous multiples, making them seemingly inaccessible to valuation-demanding investors.
However, that does not mean that there are no valuable tech stocks; these are only rare finds. Fortunately, Square Enix (OTC: SQNXF) and 1-800-Fleurs.com (NASDAQ: FLWS) are two technology companies that are increasing their revenues at impressive rates while keeping stocks very affordable. Let’s see why they are the best choices for investors.
1. Square Enix
Square Enix is the Japanese video game publisher behind the popular Dragon Quest and Final fantasy franchises and a Marvel game maker like guardians of the galaxy and Avengers. In the first quarter of 2021, the company’s sales increased 27.6% from a year ago, to 332.5 billion yen (about $ 3 billion). Simultaneously, its profits improved 26.2% to 26.9 billion yen ($ 244 million).
The newly launched titles of these franchises have been well received by fans. In fact, Square Enix sold 49.9 million gaming units in the first quarter, which is a significant increase from the 33.42 million sold in the same quarter last year.
But its biggest golden egg is long overdue. Square Enix also owns the rights to the tomb Raider series. If you’re unfamiliar with the franchise, it’s about a British millionaire heiress turned archaeologist, Lara Croft, who searches for lost artifacts (while saving the world). Since its creation in 1996 (Square Enix acquired the rights to the series in 2009), the tomb Raider the games have sold over 81 million copies and three Hollywood films based on the series have been premiered.
The last big tomb Raider The game was released in 2018, and a new one is currently in the works. Aside from its growth catalysts, Square Enix shares are also incredibly cheap – trading at just 0.48 times sales and six times earnings. This one is definitely a great deal that tech equity investors should watch out for.
Trading at a price-to-sales (P / S) ratio of one and a price-to-earnings (P / E) ratio of 17, 1-800-Flowers is a company that can add a lot of flowers to investor portfolios. As the name suggests, the company allows consumers to purchase flowers online to send to family, friends, or someone special. A key advantage of its business is its fast delivery time, often within 24 hours of ordering. This way the flowers don’t spoil.
In the third quarter of 2021 (ended March 28), 1-800-Flowers increased its revenue 70.1% year-over-year to $ 474.2 million. At the same time, the company’s net profit increased by $ 11.1 million to a positive amount of $ 1.4 million. Its activity is very seasonal; just over 40% of its income comes from Christmas gifts given in December.
Over the next two years, 1-800-Flowers expects to be able to continue to grow sales to double-digit percentages. This makes his stocks pretty undervalued for his potential. Investors who are skeptical of the flower business (or in general) should note that it is an $ 11 billion industry in the United States. There is still a long time to go before 1-800-Flowers takes full advantage of its market. This is just one of the main reasons I think the stock is a fantastic buy right now.
Buying shares solely on the basis of low valuation multiples is not a guarantee of gain. However, Square Enix and 1-800-Flowers have the potential to keep their revenue and profit growing. Combined with a positive trading outlook, this makes them the best tech stocks to buy at the right price. Now is the perfect time to buy in case more investors discover their potential and raise their stock price.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.