3 Cheap Tech Stocks to Buy Right Now

When people say a stock looks cheap, it can mean a number of different things. Today, I’m going to show you three examples of what people mean by “cheap stocks” in the tech sector, with one common quality: These stocks are affordable in a good wayand they should be on your shortlist for further research if you are in the mood to buy stocks.

Block: A modest valuation for a growth stock

Let’s start with Block (NYSE: SQ)a reputable financial services provider with a modern twist.

The stock has a market cap of $40.7 billion and trades at lofty valuation ratios such as 51 times earnings and 75 times free cash flow. But those ratios don’t tell the whole story, as Block is also a high-yield growth stock.

The company has grown its revenue at a compound annual growth rate (CAGR) of 51% over the past five years. Profits for the previous years have increased by 91% compared to the previous year. Your average analyst expects this profit increase to be followed by a CAGR of 28% over the next five years. Credit card processors like Visa (NYSE: V) Or MasterCard (NYSE: MA) cannot keep up with any of these growth indicators. Even digital payment services are comparable PayPal (NASDAQ:PYPL) it looks slow in comparison.

And when you choose valuation metrics that factor expected growth into the equation, Block stock suddenly looks incredibly affordable. Shares trade at 15 times forward earnings estimates. And its price-to-earnings-to-growth (PEG) ratio is modest, at 0.81 — lower than PayPal’s 0.85 and well below Mastercard’s 1.9 or Visa’s 2.3. A value close to 1.0 indicates a reasonable valuation, and lower scores make the stock more affordable.

In other words, Block’s rapid growth has left many investors and analysts scratching their heads. Block stock gives you access to innovative payment services and business tools, with a touch of cryptocurrency expertise, as the company owns Bitcoin (CRYPTO: BTC) The stock is worth $470 million at its current price. The stock may look expensive by traditional value ratios, but it is cheap when you factor in Block’s tremendous business growth.

Roku: Well below previous highs

Then there is Year (NASDAQ: ROKU)a veteran of technology and media streaming services.

This stock is not on this list due to its low valuation ratio. Roku is currently unprofitable in terms of net income and pretax operating income. Its free cash flow is back in the black after falling into the red in 2022 and 2023, but Roku stock is also not a bargain relative to its cash earnings.

The story continues

So how did it end up on my list of cheap tech stocks? You see, this stock is down 44% since last November and 87% from its all-time highs in July 2021. A price correction was probably in order from the previous peak, but this drop has gone too far.

Roku is a leader in a fast-growing sector with global business opportunities. It is a large market with many opportunities for future expansion. More than 40% of potential users are subscribed to streaming services in mature countries…