It's easy to find $20 tech stocks right now. The COVID-19 crisis took the wind out of Wall Street's sails in 2020, and bargain stocks are plentiful even after a dramatic recovery in May and June.
You do need to be careful out there, though. Not every low-priced stock is a good investment, and some of them are financial landmines trading at cheap stock prices for good reason.
Here are two high-quality companies that are poised to beat the market from this point on. You can't go wrong with solid tech companies like IT consulting giant Infosys (INFY 0.18%) and email encryption expert Zix (ZIXI).
Zix
When Zix bought cybersecurity company AppRiver for $275 million last year, the company's annual revenues doubled overnight and gave Zix a well-timed partnership with Microsoft (MSFT -1.00%). AppRiver offers a cloud subscription version of the Office365 productivity suite, which turned out to be a strong growth driver in the work-from-home COVID-19 era.
The benefits of the AppRiver deal don't stop there. The Office365 offering allows Zix to cross-sell its email security products in an effective way.
"The demands of remote work require businesses to digitally transfer even more sensitive information both through email as well as a plethora of new channels," CEO David Wagner said in last month's first-quarter earnings call. "We provide tools to make our customers more productive by making them more secure and by safeguarding their sensitive information."
Zixi's stock is trading at $7.25 per share today, representing a 4% gain in 2020 and a 155% bounce from the market bottom in March. This company is positioned to benefit from a post-coronavirus world where business-grade remote workflows are as common as watercoolers and coffee breaks.
Consultants are still consulting, but from their own living rooms. Image source: Getty Images.
Infosys
Infosys stock is trading at $9.30 per share today. The India-based consulting and outsourcing titan has fallen 11% year-to-date, following a 23% rebound from the 52-week lows in March.
We're still talking about an industry giant here. Infosys' market cap stands at a meaty $39.5 billion today and its trailing revenue adds up to $12.8 billion.
COVID-19 brought both headwinds and tailwinds to this company. Wall Street analysts were presenting the company as an underpriced winner in February but the pandemic led to fewer new deals and lower engagement from current clients. Infosys' fourth-quarter sales rose 7% year over year, with a marked dropoff at the tail end of the reporting period.
On the upside, Infosys customers are asking for help with implementing cloud-based business processes.
"There is a strong interest in looking at cloud movements and making changes in virtualization," CEO Salil Parekh said in April's fourth-quarter earnings call. "So in the medium term, given our strength in terms of delivery, our financial strength and the overall interests that clients have in consolidation, I feel positive. But in the near term, we see some weaknesses going ahead."
Management does need to roll up its proverbial sleeves and make the most of this situation, grabbing market share through competitive pricing of its services, but that mixture of short-term challenges and longer-term opportunities is a classic setup for mispriced shares. You can grab Infosys stock at attractive prices right now, paired with a generous effective dividend yield of 2.7%.
