Do you consider yourself a value investor?
If you believe that stocks occasionally trade above and below their fair value, and that profits can be made by correctly predicting this, your answer may be yes.
In the never-ending search for potentially undervalued stocks, we present an idea of how to look for these underpriced names.
Focusing on the tech sector, we ran a screen on about 500 U.S.-traded tech stocks for those trading at the most significant discounts to mean analyst target prices.
Of course, analyst prices tend to be inflated most of the time, so we ran a screen that used the most pessimistic analyst target price as the benchmark for our analysis.
In addition, we only focused on companies that have more than five analysts' target prices (to make sure we only focus on companies that have decent analyst coverage).
Do you think these stocks will meet their analyst targets?
Use this list as a starting point for your own analysis. (Click here to access free, interactive tools to analyze these ideas.)
1. Demand Media (NYSE: DMD ) : Operates as a content and social media company in the United States. Market cap of $535.47M. Of the 10 analysts that have set a target price on the stock, the lowest price target stands at $8.00. This implies a potential upside of 34.45% from current levels around $5.95.
2. Echelon (Nasdaq: ELON ) : Develops, markets, and sells energy control networking solutions primarily in the Americas, Europe, the Middle East, Africa, and the Asia Pacific/Japan. Market cap of $305.57M. Of the 10 analysts that have set a target price on the stock, the lowest price target stands at $9.00. This implies a potential upside of 33.33% from current levels around $6.75.
3. Mercury Computer Systems (Nasdaq: MRCY ) : Designs, manufactures, and markets high-performance embedded, real-time digital signal and image processing systems and software for embedded, and other specialized commercial and defense computing markets. Market cap of $479.49M. Of the 6 analysts that have set a target price on the stock, the lowest price target stands at $19.00. This implies a potential upside of 28.47% from current levels around $14.79.
4. IPG Photonics (Nasdaq: IPGP ) : Manufactures fiber lasers and amplifiers for use in a range of markets, such as materials processing, advanced technologies, telecommunications, and medical applications. Market cap of $2.44B. Of the 8 analysts that have set a target price on the stock, the lowest price target stands at $62.00. This implies a potential upside of 27.89% from current levels around $48.48.
5. EXFO (Nasdaq: EXFO ) : Designs, manufactures, and markets test and service assurance solutions for wireless and wireline network operators, and equipment manufacturers in the telecommunications industry worldwide. Market cap of $354.92M. Of the 6 analysts that have set a target price on the stock, the lowest price target stands at $7.00. This implies a potential upside of 27.04% from current levels around $5.51.
6. Interactive Intelligence Group (Nasdaq: ININ ) : Provides software application suites for voice over Internet protocol (VoIP) business communications to enterprises in the United States and internationally. Market cap of $527.34M. Of the 8 analysts that have set a target price on the stock, the lowest price target stands at $33.00. This implies a potential upside of 26.53% from current levels around $26.08.
7. Changyou.com Limited (Nasdaq: CYOU ) : Develops and operates online games in the People's Republic of China. Market cap of $1.51B. Of the 16 analysts that have set a target price on the stock, the lowest price target stands at $36.00. This implies a potential upside of 26.01% from current levels around $28.57.
8. hiSoft Technology International (Nasdaq: HSFT ) : Provides outsourced information technology (IT) and research and development services in North America, Europe, and Asia. Market cap of $412.29M. Of the 8 analysts that have set a target price on the stock, the lowest price target stands at $16.00. This implies a potential upside of 25.98% from current levels around $12.70.
9. SXC Health Solutions (Nasdaq: SXCI ) : Provides pharmacy benefit management (PBM) services and health care information technology solutions to the health care benefits management industry in North America. Market cap of $2.91B. Of the 20 analysts that have set a target price on the stock, the lowest price target stands at $55.00. This implies a potential upside of 24.69% from current levels around $44.11.
10. Sohu.com (Nasdaq: SOHU ) : Engages in the brand advertising, online gaming, sponsored search, and wireless businesses in China. Market cap of $2.46B. Of the 17 analysts that have set a target price on the stock, the lowest price target stands at $73.00. This implies a potential upside of 23.67% from current levels around $59.03.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Alexander Crawford does not own any of the shares mentioned above. Target price data sourced from Thomson/First Call (via Yahoo! Finance).
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