Some tech stocks can be difficult to afford on a budget, unless you know how to buy fractional shares. In other corners of the proverbial Silicon Valley, you can pick up a single share of great tech stocks for less than a Lincoln. Since share prices ultimately depend on the number of shares that have been issued; there's no reason to stay away from low-priced tickers. You can actually find some incredible high-quality businesses here, and it's easy to get a position started.
Read on to see how LG Display (LPL 0.97%), Extreme Networks (EXTR +2.17%), and A10 Networks (ATEN +1.55%) combine fantastic technology businesses with stock prices well below $20.
Image source: Getty Images.
1. LG Display: $10.70 per share
This maker of LCD and OLED (organic light-emitting diode) panels lives and dies with the consumer electronics market. LG displays are found in everything from smartphones and tablet computers to big-screen TV sets and notebook screens. You will also find the company's products in many wearable devices and in the infotainment systems of modern cars.
LG Display is moving most of its manufacturing capacity over from LCD to OLED, reflecting a long-term change in the consumer market. As an established first-mover in OLED solutions and a long-term partner of OLED technology specialist Universal Display (OLED +1.88%), LG Display holds the keys to the kingdom of this brave new world.
Keeping up with dramatic changes in the business environment is neither easy nor cheap, and LG Display saw a modest downturn starting in 2018. The downtrend bounced off the bottom last summer, in the deep end of the COVID-19 crisis. Yet the company is poised to deliver stellar growth as the OLED market continues to experience explosive growth on a global level.
You can buy into LG Display's promising business prospects for less than $11 per share today, roughly 9.3 times the company's trailing free cash flows or 8.7 times forward earnings estimates. That's a good idea in my book.
2. Extreme Networks: $10.60 per share
Extreme Networks specializes in networking hardware for cloud-scale data centers and Wi-Fi solutions for enterprise campuses. The company's newfound focus on networking for the cloud has positioned it for impressive growth in the next few years, but the stock still trades at an affordable P/E ratio of 14 times forward earnings.
Rebuilt around a couple of strategic buyouts over the last seven years, Extreme's business model is all about flexible management of high-speed networks. Extreme became a legit challenger to Cisco Systems (CSCO +0.52%) and Juniper Networks (JNPR +0.00%) just in time to take advantage of several converging networking trends. WiFi 6 is a big win for Extreme, and the company is helping many clients take advantage of the Internet of Things.
If that sounds like a winning strategy to you, I'm nodding along. Extreme Networks' stock deserves a significantly richer price tag.
Image source: Getty Images.
3. A10 Networks: $10.70 per share
Staying in the networking sector, you'll find another underpriced winner in data security expert A10 Networks.
This company offers remote application delivery services over the public cloud, wrapped in a tight bundle of security tools. When corporations of any size need their employees to get work done from outside the central network, A10 can help them do that without opening up gaping security holes.
I don't know if you noticed, but that's a pretty popular idea nowadays. A10 has seen organic year-over-year growth throughout the entire coronavirus era, along with surging cash flows. Its portion of security-related sales rose from 50% to 57% over the last four quarters, anchored in several new security contracts with governments around the world.
A10 is both finding new customers and expanding its contracts with existing clients. The top-line boost in recent quarters will have legs for the long term if it turns out that work-from-home policies are here to stay. Yet, A10's shares can be had at the modest price of 17 times forward earnings or 20 times free cash flows. It's not quite the bargain-bin discount you saw in Extreme Networks and LG Display, but still a solid rebate on a stock tied to a solid high-growth business.
