Here at Zacks, we don’t generally classify stocks as “cheap” or “expensive”, and rather than looking at the stock’s face value, we have a system that puts an emphasis on earnings estimate revisions to find stocks that will hopefully be winners for investors.
That being said, low-priced stocks can be attractive to smaller investors that can’t necessarily afford large stakes in companies with higher priced stocks. When looking at these low-priced stocks, we can look at the same trends in growth, value, and momentum and apply the Zacks Rank to properly analyze the potential that these companies have.
Today we’ve highlighted three stocks that fall into the broad “technology sector.” Each of these three stocks is currently trading for less than $10 per share and holds a Zacks Rank #2 (Buy) or better ranking. Take a look at the strong estimate revision activity and other factors that make these companies stick out right now.
1. ShoreTel, Inc. ( SHOR )
Prior Close: $5.85
ShoreTel is an enterprise telecommunications vendor. With 40,000 customers worldwide, the company provides voice and text solutions to a wide variety of companies. ShoreTel has a proven history of beating earnings expectations, surpassing the Zacks Consensus Estimate by an average of 99% in each of the trailing four quarters. Current estimates are on the rise, lifting the stock to a Zacks Rank #1 (Strong Buy). A quick glance at this stock’s chart reveals that it has been relatively range-bound this year, and with shares near their 52-week low, now could be a great time to buy on the dip.
2. Guidance Software ( GUID )
Prior Close: $6.67
Guidance Software is an industry leader in endpoint detection and response (EDR), cyber risk management, and digital investigative solutions. Thanks to company outlook, estimate revision activity for the current quarter has been less than favorable, but positive revisions to the company’s full-year and next-year estimates have lifted the stock to a Zacks Rank #2 (Buy). This is also a solid growth-based pick, as its “A” grade for Growth in our Style Scores system is punctuated by its projected earnings growth of over 100%. Looking ahead, Guidance’s earnings are expected to grow by over 633% next year.
3. Extreme Networks, Inc. ( EXTR )
Prior Close: $9.99
Extreme Networks is a developer of next-generation switching solutions that provide ISPs and content providers better performance at lower costs. After another solid earnings report, shares of Extreme Networks have been on the rise. Furthermore, revisions to the company’s earnings estimates have poured in, helping the stock earn a Zacks Rank #2 (Buy). We now expect Extreme Networks to see EPS growth of 104% and sales growth of 12% this year. The stock also sports an “A” grade for Growth and a “B” grade for Momentum, as well as an overall VGM grade of “B.”
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A stock’s market price is not a clear indicator of whether it is a good investment. However, the nice thing about the Zacks Rank is that it can be applied to stocks of any price. For smaller investors looking to find solid tech stocks at lower prices, this list is a great place to start.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.