2 Low-Cost Tech Stocks

As a high-growth business, the IT sector is recognized for being expensive. Many companies, particularly in the software sector, aren’t even profitable. However, this does not rule out the possibility of finding value plays in the sectors. All you have to do is know where to look.

Continue reading to learn about two stocks that match the bill today.

Alphabet Stock: A Tech Behemoth That Can Weather The Ad Slowdown

Advertising inventories have taken a beating over the previous year as demand has dwindled, putting a strain on digital advertising networks. This includes Alphabet (NASDAQ:GOOG 0.95%) (NASDAQ:GOOGL 1.16%), Google’s parent company, whose revenue growth slowed to 13% in the second quarter owing to unfavorable comparisons and advertiser uncertainty.

However, Alphabet stock (NASDAQ:GOOGL) has continued to fall since then, despite the company’s sustained dominance in an internet searches. Though the firm will experience headwinds such as slower ad demand and a higher dollar for the remainder of the year and maybe into 2023, such assumptions are already built into the stock price.

Analysts anticipate that Alphabet’s sales growth will decelerate to single digits in the year’s second half and that profits per share will decline as well. However, advertising demand will ultimately return, and the dollar will not continue to increase indefinitely. When the ad market recovers, Alphabet’s performance should improve on both the top and bottom lines.

That implies investors have an excellent chance to purchase shares of the firm at a price-to-earnings ratio of 18, or close to 16, when the company’s $125 billion cash hoard is included. Alphabet has also been actively buying back stock, which will assist boost profits per share in the future years and adds to the market’s undervaluation.

Netflix Stock: A Resurrected Streaming Stock

Netflix stock (NASDAQ:NFLX) looks to be back on track after its third-quarter financial release. In the third quarter, the corporation resumed subscriber growth, attracting 2.4 million new members against projections of just 1 million. The business also predicted that subscriber growth would increase in the fourth quarter, with 4.5 million new subscribers added.

For advertising, Netflix is a one-of-a-kind asset. It has over 200 million paying customers worldwide and provides marketers with the best of both digital and television advertising. This is because it combines the targeting of a social networking platform with the large-screen video format preferred by marketers, and it has been demonstrated to be a more successful type of advertising than static digital adverts.

The streamer is also tightening down on password sharing, introducing a new “account sharing” option in which customers will be charged a lower rate to share accounts with persons outside of their homes. This should provide Netflix with a virtually cost-free income stream.

Netflix’s P/E ratio of 27 isn’t cheap, but it’s a reasonably acceptable price for a firm with a lot more profit growth ahead of it.

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