Unnoticed Tech Shares Worth Investing in during November
Unnoticed Tech Shares Worth Investing in during November
The S&P 500 has skyrocketed by 67% from the rock bottom of 2022's bear market. This surge has inflated the values of numerous stocks, yet there are still lucrative opportunities, even in the tech sector.
Investing in Companies exhibiting growth and riding the crest of market trends may yield substantial returns, particularly when purchased at reasonable prices. Below are two stocks with undervalued prices in relation to their growth prospects.
1. Dell Technologies
Dell Technologies' (DELL -0.61%) shares have experienced significant growth in recent years. While around half of its business remains reliant on PC sales, the stock's growth has largely stemmed from the soaring demand for servers, an area where Dell has reigned supreme. A recent downturn has caused the valuation to drop to an enticing price point for novice investors.
The interest in servers tailored for artificial intelligence (AI) is snowballing. Dell's infrastructure solutions section recorded a 38% revenue increase in fiscal Q2 (closed Aug. 2), with server and networking revenues surging by an impressive 80% compared to the previous quarter, hinting at a colossal growth prospect.
The growth in infrastructure solutions, including AI server sales, is boosting profit margins too. Dell's earnings per share surged 86% year over year in fiscal Q2, and management anticipates the profit margins from their infrastructure solutions segment to improve further in the near future.
Dell is optimistic about growing earnings at a compound annual rate of 10% or more through fiscal 2028. This presents an opportunity for investors to acquire the stock at a forward price-to-earnings (P/E) ratio of merely 17, which is a discount to the S&P 500's average of 22. This deal is too good to pass up for a major player in AI infrastructure. The likelihood of the company surpassing its growth expectations is high, given the anticipated 10-fold increase in the global market for AI servers by Statista over the next decade.
2. Logitech International
Logitech International's (LOGI -0.28%) shares rebounded alongside the broader market in 2022, but have since dropped by 12% this year. This decline creates an excellent opportunity for investors to invest in the computer peripherals company.
Revenue rose by 6% year over year in the fiscal 2025 second quarter (concluded Sept. 30), marking a reversal from the year-ago quarter's 8% decline. Logitech reported gains in pointing devices, keyboards, gaming wired mice, and headsets for console gaming and PC.
These staple products have long been Logitech's mainstay, but the company is expanding its footprint in the enterprise sector, a significant growth opportunity. Less than 20% of global conference rooms are equipped with video, affording Logitech ample room to sell peripherals in retail, healthcare, and education.
Logitech's sales growth follows the improvement in the PC market. Looking ahead to 2025, the PC market is expected to have a strong year due to an influx of AI-enabled devices hitting the market, potentially enhancing sales for Logitech.
Analysts anticipate the company's earnings to rise 8% annually over the next five years, making the stock's forward P/E of 18 reasonable. However, Logitech has the potential to surpass these predictions if it successfully enters the enterprise sector and capitalizes on the escalating demand for AI-enabled PCs.
Gartner estimates AI PCs to account for 43% of PC shipments in 2025, up from 17% in 2024. The surge in new PC sales should eventually bring about higher sales for Logitech, enabling the company to deliver superior earnings results in the coming years.
Considering the significant potential for growth in AI-enabled devices, investing in companies that excel in this sector could be financially rewarding. Dell Technologies, with its market-leading server sales and expanding infrastructure solutions, offers an enticing opportunity at a discounted forward price-to-earnings ratio. On the other hand, Logitech International, known for its computer peripherals, is also a promising investment due to its entrance into the enterprise sector and expected rise in AI-enabled PC sales.
With AI-PCs predicted to account for 43% of PC shipments by 2025, investing in companies like Logitech could lead to substantial returns for individuals interested in the finance and investing sphere.