May 29, 2024


The Joy of Technology

7 Beaten-Down Tech Stocks to Buy for the Long Term


  • Clearfield (CLFD): Continued growth and a stock repurchase plan bodes well for this fiber optic products maker.
  • Endava (DAVA): High demand for its digitization services will likely enable it to sustain above-average levels of growth.
  • Nvidia (NVDA): This chipmaker will remain a winning investment, thanks to robust demand from existing end-users, plus trends like the metaverse.
  • ON Semiconductor (ON): The market may be prematurely assuming its growth will come to a screeching halt.
  • PDF Solutions (PDFS): Global chip shortage will keep demand high for its software.
  • Photronics (PLAB): Photomask maker trades at too discounted of a valuation, due to concerns about geopolitical risk and slowing growth.
  • SiTime (SITM): A maker of a key component in electronic devices, it’s too late to buy it after its recent partial rebound.
tech stocks A graphic of a person's hands resting on a laptop with a stock line graph moving through it

Source: Shutterstock

Since briefly entering bear market territory last month, the Nasdaq Composite has started to recover. By extension, many of the names I’ve remarked as tech stocks to buy have made recoveries as well.

Only time will tell whether bullish commentary saying we’ve reached a bottom is accurate. Or, if more bearish forecasts, pointing to rising interest rates and rising recession risk, will pan out, and the market overall will stay very volatile.

But in the case of high-quality tech names, underlying fundamentals, not the market’s near-term direction, should be your focus. Today’s storms, whether they last long, or wrap up quickly, do not have a big impact on the bull case with these seven tech names.

While these seven have bounced back, all of them remain names to consider buying. Still off past highs, at current prices each one is at a fantastic entry point for a long-term position.

Ticker Company Current Price
CLFD Clearfield $60.07
DAVA Endava $127.71
NVDA Nvidia $240.25
ON ON Semiconductor $53.47
PDFS PDF Solutions $25.12
PLAB Photronics $14.96
SITM SiTime $202.14

Clearfield (CLFD)

A maker of fiber optic products, tailwinds from the pandemic sent shares in Clearfield (NASDAQ:CLFD) on an epic run during 2020 and 2021. During this period, the stock went from under $10 per share to as much as $86.71 per share.

CLFD stock even kept climbing in December, a month after the overall tech sector peaked in price. So far in 2022, it has seen mixed performance. Dropping during the January selloff to below $50 per share, it bounced back to over $60 per share, thanks to a strong earnings report.

For the December quarter, the company reported 89% revenue growth, a triple-digit increase in earnings. It has traded sideways since then. At around $60 per share today, it remains well below its past high-water mark.

Yet while sales growth is projected to slow down this year (to between 25%-30%), this is more than accounted for in its current valuation. Add in other positives, like its increased share repurchase plan, and there’s plenty to suggest it should have no trouble getting back to its past high within a reasonable timeframe.

This stock earns an “A” in my Portfolio Grader.

Endava (DAVA)

Back in February, I included Endava (NYSE:DAVA) as one of seven butchered tech stocks selling for a discount due to market volatility. Shares in this U.K.-based software development company dropped again during the early March selloff, but have popped near late February prices (around $131 per share).

In turn, unchanged over the past month, DAVA stock has a way to go before it’s near its past high ($172.41 per share). That said, much like Clearfield, once today’s uncertainties finally clear up, focus will shift back onto fundamentals. This gives it a strong chance of making a recovery as well.

Especially, given sell-side estimates calling for it to experience 40.6% sales growth this fiscal year. Estimates also call for earnings growth of around 41%. You may be worried that increased chances of a recession means belt-tightening by enterprise IT end-users.

Even so, with digitization services (Endava’s specialty) likely to withstand this possible challenge? I wouldn’t assume that it has a high chance of falling short of expectations. Consider DAVA stock a buy.

This stock earns an “A” in my Portfolio Grader.

Nvidia (NVDA)

The most well-known tech stock on this list, semiconductor company Nvidia (NASDAQ:NVDA) needs little introduction. Strong demand from end-users of all shapes and sizes has been the driver of its strong stock market performance since 2020.

Still, so far this year, that has not been enough for it to avoid the rollercoaster ride the rest of the tech space has experienced. Down 21% year-to-date, NVDA has zig-zagged since January. In recent months, it ha fallen from $300 to just above $200 per share, before partially bouncing back, trading for around $237 per share today.

However, robust demand will help carry this maker of CPU and GPU chips back toward prices well above $300 per share. (Assuming, of course, that enthusiasm returns to tech).

As a widely held mega-cap stock (market capitalization of nearly $694 billion), you may think that it has far less runway than the much smaller tech stocks. Yet beyond just re-hitting its past high, NVDA stock stands to hit new all-time highs in the years ahead. Many trends (including the rise of the metaverse) remain on its side.

This stock earns an “A” in my Portfolio Grader.

ON Semiconductor (ON)

The global chip shortage has been a boon for ON Semiconductor (NASDAQ:ON). In contrast to the more asset-light “fabless” chip makers, this one operates its own foundries. This has resulted in ON reporting strong operating results that have come in ahead of estimates.

This has resulted in ON stock holding up relatively well compared to other tech stocks. Nevertheless, there’s the expectation that its current tailwinds will be temporary (i.e., chip shortage will soon end). That’s why shares trade at a low valuation (14.3x earnings).

Having said that, it’s not guaranteed that after strong results over the past year, ON will see little-to-no growth in the years ahead. Demand is expected to keep rising for its chips among its end-users in the industrial sector. This points to it continuing to deliver strong results.

In turn, enabling ON stock to continue moving higher, due to both earnings growth and multiple expansion.

This stock earns an “A” in my Portfolio Grader.

PDF Solutions (PDFS)

Don’t let its name fool you. PDF Solutions (NASDAQ:PDFS) has nothing to do with the ubiquitous digital document format. Rather, this company provides the software used by semiconductor manufacturers to maximize quality, profitability and output from their facilities.

Obviously, with the aforementioned global chip shortage, this company has experienced a re-acceleration of its sales growth over the past year. This at first translated into a much higher PDFS stock price.

But with the tech selloff in recent months, shares have struggled to move much higher. Instead, they’ve pulled back moderately, dropping from the low-$30s to the high-$20 per share. There may, however, be opportunity with this stock, following its recent weakness.

As the supply chain headwinds continue to create increased demand for its software, it stands to see solid increases in its top line this year and the next. Earnings-per-share are also set to rise considerably, from 8 cents per share in 2021 to 33 cents per share this year and 63 cents per share in 2023.

This stock earns an “A” in my Portfolio Grader.

Photronics (PLAB)

Admittedly, it may be an overstatement to say Photronics (NASDAQ:PLAB) has been a hard-hit stock. At around $15 per share, down from a 52-week high of $20.30 per share, it’s down just 22% year-to-date.

Yet while only down moderately, PLAB stock is a bargain relative to its current valuation. At today’s prices, this company, which makes an important semiconductor component (photomasks), trades for just 11.1x earnings.

Like ON, this low valuation of Photronics stock is due to expectations of slowing earnings growth over the next year. Along with this, concerns related to the rising tensions between the U.S. and China. If these continue to rise, this materially impacts its operating performance (the company has a heavy presence in both China and Taiwan).

These issues, however, are likely more than accounted for in its heavily discounted valuation. As earnings keep rising, and if geopolitical worries simmer down, PLAB is one of the top tech stocks to buy, as it could be on its way toward new multi-decade highs.

This stock earns an “A” in my Portfolio Grader.

SiTime (SITM)

SiTime (NASDAQ:SITM) is another pandemic-era winner that has traded wildly over the past few months. While not a household name, SiTime is a major manufacturer of MEMS (micro-electromechanical systems) timers. MEMS timers are commonly used in electronic devices.

It has experienced record growth over the past two years. This will likely continue in 2022 and 2023. Yet this isn’t what is in focus now with investors. Instead, with the prospect of higher interest rates, the market has been more cautious about richly priced growth stocks.

That’s why SITM stock experienced a more than 50% drawdown between November and March. In recent weeks, as the market has warmed back up to tech/growth, shares have made a partial recovery. Shares are up more than 20% in the past month.

However, I wouldn’t say it’s too late to dive in. While up 20%, it’s still down more than 30% from its highs. Once growth comes back into vogue, and as it continues to deliver impressive results, SiTime will continue to make a recovery.

This stock earns an “A” in my Portfolio Grader.

On the date of publication, Louis Navellier had a long position in CLFD, DAVA, NVDA, and SITM. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article. InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.


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