Ever wondered if the tech sector of the stock market has hidden gems just waiting to be discovered? In a media universe where high prices often overshadow value, I'm turning the spotlight on an often-overlooked segment: low-priced tech stocks, trading under $20 per share. I'm not talking about the usual tech giants today; instead, I'll uncover a few under-the-radar stocks that combine robust innovation, long-term growth potential, and surprising affordability.
You don't need to break the bank to invest in tomorrow's technology. The three tech stocks below should prove that point.
NASDAQ: OPRA
Key Data Points
Opera Software: $12.15 per share
Web-browser developer Opera Software (OPRA 0.10%) trades at a very affordable stock price, with a market cap of just $1.1 billion. One might think there's no room for innovation in a market dominated by the Chrome browser, especially since most alternatives (Opera included) are built on the market-leading browser's code base.
But Opera has gone far beyond tweaking Chrome's user interface a bit. Sure, the basic Opera browser does exactly that, but its tweaks are useful innovations such as tab islands and a modular interface design. It also offers an integrated artificial intelligence (AI) chatbot to assist the user in real time, several social network messengers in a convenient sidebar to the main browsing window, and privacy protection tools such as a built-in ad blocker and a free virtual private network (VPN) service.
The company also offers Opera GX, a browser tailor-made for online gamers where the user can control each tab's consumption of memory, processing, and network performance. Opera Cashback is an e-commerce shopping platform with automatic cash-back rewards. The Norwegian innovator also provides a game-making development system where you can write code or use a point-and-click development system. Then, the GameMaker platform automatically exports your new game to nearly any hardware system and publishing catalog.
So Opera offers far more than a slightly tweaked Chrome browser, and its diverse product catalog is turning heads. The company sports 311 million monthly active users, robust revenue growth, and strong free cash flows even amid the digital advertising downturn in recent quarters:
OPRA Free Cash Flow data by YCharts
Yet, the stock isn't just low-priced in terms of dollars per share, but also from a valuation standpoint. The stock is changing hands at the affordable price of 2.8 times sales and 19.7 times free cash flow, and both of these ratios are quite low for a growth stock of Opera's caliber. This stock has more than doubled in 2023, and it still looks too cheap.
NASDAQ: STNE
Key Data Points
StoneCo: $14.50 per share
Brazilian fintech veteran StoneCo (STNE 0.22%) comes with an unusual selling point. Legendary investor Warren Buffett's Berkshire Hathaway (BRK.A 0.24%) (BRK.B 0.38%) has built a $155 million position in this stock. That's a strong vote of confidence in StoneCo's business, indicating that the company and stock passed Berkshire's strict fundamental analysis with flying colors. Berkshire started that position at StoneCo's initial public offering in 2018, sold a few shares near the all-time highs in 2021, and holds on to 76% of the original investment today.
The Oracle of Omaha would not hang on to this investment if he and his assistants thought the growth story was over. In fact, StoneCo's top-line grwoth caught fire almost exactly where investors gave up on the stock. Cash profits are also on the rise, and the all-important Brazilian economy is getting back on its feet after a brutal inflation crisis.
But market makers haven't embraced the good tidings yet. You can still pick up StoneCo shares at the modest valuation of 4.4 times sales and 12.3 times free cash flows. And don't forget that Buffett and his crew still support StoneCo, aiming for a better future. When Brazilians are ready to go all-in on e-commerce, StoneCo stands ready to provide ultra-modern financial services and transaction processing systems in that revolution. Astute investors want to have a few StoneCo shares in their pockets at that tipping point.
NYSE: PATH
Key Data Points
UiPath: $18.40 per share
Finally, process automation may sound boring but it's all about business efficiency and cost savings. It's no surprise to see automation expert UiPath (PATH +1.85%) the talk of the town in 2023, as cost controls are worth their weight in gold and UiPath taps into the AI boom.
The company provides drop-in process automation solutions for a plethora of specific industries, ranging from intellectual operations like banking and healthcare to the more physical manufacturing and retail industries. Whatever your business might be, there's always room to make it more efficient with optimized processes -- and UiPath has a specialized AI system that meets the particular needs of many industries.
UiPath's optimization systems are incredibly easy to use, thanks to their deeply integrated AI functions. For example, UiPath can start is process analysis from a screenshot of a business system's application interface. "You can take, like a human user, purely a screenshot and it understands all the controls and the link between them," according to co-CEO Daniel Dines. That story dated back to 2018, and now the company's deep learning analysis connects to a user-friendly generative AI system, too.
This is another example of steady revenue growth across the economic challenges of recent years, and UiPath's cash profits are soaring in 2023. The stock is up by 46% year-to-date, but is it expensive? You tell me. UiPath shares are trading at a lofty 9.1 times sales and 62.5 times free cash flow, but its sales have growth at a compoud average growth rate (CAGR) of 68% in the last five years.
So UiPath's stock is available for less than $19 per share, but some investors stay away due to the rich valuation ratios. That's alright -- high-octane growth stocks aren't every investor's cup of rocket fuel. But if you don't mind attaching a premium price tag to a fast-growing innovator, UiPath might be the perfect stock for you.
