2 Tech Stocks Under $10 to Buy, 2 to Sell
With continued remote working trends and digital transformation, the technology sector is expected to grow significantly in the upcoming months. Howev...
With continued remote working trends and digital transformation, the technology sector is expected to grow significantly in the upcoming months. However, given the current market volatility, it could be wise to add quality tech stocks Wipro (WIT) and Nokia (NOK), currently trading under $10. However, not all low-priced stocks in this space are well-positioned to gain. DiDi Global (DIDI) and Katapult Holdings (KPLT) are best avoided because of their bleak near-term prospects.
It’s no surprise that the demand for advanced technology-based products and services increased exponentially amid the COVID-19 pandemic. As the COVID-19 cases continue to rise and several industries are undergoing a digital transformation, the technology industry could keep growing in the foreseeable future.
Yesterday, the tech-heavy Nasdaq fell 2.8% to 14,546.68, marking its worst trading day since March as treasury yields continued to rise and lawmakers in Washington continued their budget stalemate. However, according to Gartner, Inc. (IT) report, governments globally are expected to spend $557.3 billion in 2022 on information technology, representing a 6.5% year-over-year rise.
Given this backdrop, it could be wise to scoop up the shares of fundamentally sound tech stocks Wipro Limited (WIT) and Nokia Corporation (NOK), which are currently trading under $10. However, low-priced stocks in this space DiDi Global Inc. (DIDI) and Katapult Holdings, Inc. (KPLT), are best avoided because of their weak near-term prospects.
Stocks to Buy:
Wipro Limited (WIT)
Based in Bengaluru, India, WIT operates as information technology (IT), consulting, and business process services company worldwide. It operates through three segments: IT Services, IT Products, and India State-Run Enterprise Services (ISRE).
WIT launched the Wipro-Google Cloud Innovation Arena on September 17. This collaboration between Wipro FullStride Cloud Services and Google Cloud is expected to provide in-house technical expertise, ensure seamless cloud adoption, and accelerate innovation to drive business transformation. This could help WIT expand its product and services portfolio.
WIT’s total revenue increased 22.4% year-over-year to $2.46 billion in the quarter ended June 30, 2021. Its gross profit came in at $740 million, up 21% year-over-year. Its profit for the period came in at $436 million, representing a 34.3% year-over-year rise. Its EPS increased 40.8% year-over-year to $0.08.
Analysts expect WIT’s revenue and EPS to increase 21.8% and 11.5% year-over-year to $10.17 billion and $0.29, respectively, in fiscal 2022. In addition, it has surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 89.1% to close yesterday’s trading session at $8.83.
WIT’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
WIT has an A grade for Stability, and a B grade for Momentum and Quality. Within the Outsourcing - Tech Services industry, it is ranked #6 out of 11 stocks. Click here to see the additional POWR Ratings for Growth, Value, and Sentiment for WIT.
Nokia Corporation (NOK)
Headquartered in Espoo, Finland, NOK offers mobile and fixed network solutions worldwide. The company operates through four segments: Mobile Networks, Network Infrastructure, Cloud and Network Services, and Nokia Technologies.
On September 21, NOK launched FP5, its fifth generation of high-performance IP routing silicon. This sets new benchmarks for IP network security and energy efficiency. Consequently, this could lead to increased revenues for the company.
For the fiscal second quarter ended June 30, 2021, NOK’s net revenue increased 4.3% year-over-year to EUR 5.31 billion ($6.19 billion). Its gross profit came in at EUR 2.18 billion ($2.54 billion), up 12.2% year-over-year. Its net profit came in at EUR 351 million ($409.50 million), representing a 254.5% year-over-year rise. Also, its EPS increased 200% from the same period last year to EUR 0.06.
NOK’s revenue is expected to be $26.32 billion in fiscal 2021, representing a 5.6% year-over-year rise. The company’s EPS is expected to increase 27.6% year-over-year to $0.37 in the current year. In addition, it surpassed Street EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 39.2% to close yesterday’s trading session at $5.43.
It’s no surprise that NOK has an overall B rating, which equates to a Buy in our proprietary rating system. In addition, it has an A grade for Sentiment, and a B grade for Value.
Stocks to Avoid:
DiDi Global Inc. (DIDI)
DIDI is a mobility technology platform providing ride-hailing and other services across China, Brazil, Mexico, and internationally. The China-based company also offers intra-city freight, food delivery, and financial services. It made its stock market debut on June 30, 2021, but has run into several controversies since then.
Several law firms have launched investigations against DIDI due to potential violations of the federal securities laws. It is alleged that the company made false and misleading statements to the market, such as it “had the problem of collecting personal information in violation of relevant PRC laws and regulations.”
DIDI’s revenue is expected to increase 24.7% year-over-year to $38.83 billion in fiscal 2022. However, its EPS is expected to remain negative in the current year. Over the past month, the stock has lost 2.9% to close yesterday’s trading session at $7.98.
DIDI’s POWR Ratings reflect its poor prospects. The stock has an overall D rating, which equates to a Sell in our proprietary rating system. In addition, it has a D grade for Stability and Quality.
Katapult Holdings, Inc. (KPLT)
KPLT is an e-commerce focused financial technology company providing e-commerce point-of-sale lease-purchase options for non prime consumers in the United States. In addition, its lease-purchase platform, Katapult, offers alternative solutions for retailers and consumers.
Many law firms have launched class-action lawsuits against KPLT. According to the complaint, the company made false and misleading statements to the market and violated the Securities Exchange Act of 1934.
For the second quarter ended June 30, 2021, KPLT’s net loss came in at $8.10 million compared to a net income of $5.09 million in the year-ago period. Its loss per share came in at $0.17 compared to an EPS of $0.09 in the prior-year period. Also, its total liabilities came in at $173.95 million for the period ended June 30, 2021, compared to $140.78 million for the period ended December 31, 2020.
Over the past nine months, the stock has lost 59.2% to close yesterday’s trading session at $5.61.
KPLT’s POWR Ratings are consistent with this bleak outlook. The stock has an overall D rating in our proprietary rating system, which equates to a Sell in our proprietary rating system.
It has an F grade for Stability, and a D grade for Value and Quality. Click here to access KPLT’s ratings for Growth, Momentum, and Sentiment as well. KPLT is ranked #50 of 51 stocks in the Consumer Financial Services industry.
WIT shares were trading at $8.90 per share on Wednesday afternoon, up $0.07 (+0.79%). Year-to-date, WIT has gained 57.81%, versus a 17.31% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.