Five Cheap Tech Stocks to Buy Now

It’s sometimes hard for an average investor to spot tech stocks that are trading at discounts, especially when it comes to under-the-radar stocks that are not fully understood by the market. It’s natural to pay attention to huge, iconic tech companies like Apple and Alphabet, which people are already emotionally invested in, and while those stocks have been tremendous performers in the past, there may not be huge growth in the near future.

However, the market is seething with less-known tech stocks which have explosive growth potential. In this article we have analyzed the latest 13F filings from a collection of only the best hedge funds in the world and come up with a list of five cheap stocks to buy now. Read on to find out which unheralded tech names are attracting the most smart money attention.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 39.7% gains over the past 12 months and outperformed the 24.1% gain enjoyed by the S&P 500 ETFs. Our enhanced small-cap hedge fund strategy returned more than 45% over the last 12 months and outperformed SPY by more than 30 percentage points over the last 4.5 years (see details here).

Viavi Solutions Inc (NASDAQ:VIAV)

Viavi Solutions Inc (NASDAQ:VIAV) is a California-based company that provides monitoring and assurance solutions to communications service providers. The company’s stock has gained over 44% during the last six months. Last week, investment firm Rosenblatt started coverage of Viavi Solutions (NASDAQ:VIAV) with a ‘Buy’ rating and a price target of $17.20. Last month, following Viavi’s second quarter results, Jefferies analyst James Kisner said that he was optimistic about the stock amid an expected rebound in demand from carriers, improved growth prospects driven by 3D sensing, and an increase in margins following self-help initiatives. A total of 24 hedge funds tracked by Insider Monkey are bullish on Viavi Solutions Inc (NASDAQ:VIAV) as of the end of the fourth quarter.

On the following pages, we will share the remainder of the cheap tech stocks which are worth your attention.

Fitbit Inc (NYSE:FIT)

Fitbit Inc (NYSE:FIT) looks to be in trouble amid increasing competition in the wearables market and the stock has lost about 60% in value over the past year on those fears. But, the company says that its expansion into international markets and partnership with fitness and wellness programs will push its operating profits up. Some analysts think that Fitbit could become a target of a buyout in the near future as well, as its brand is quite famous internationally and the company has a solid user base of 23.2 million people, so there are some upside catalysts for the stock near-term. Philippe Laffont’s Coatue Management owns 8.26 million shares of Fitbit Inc (NYSE:FIT) as of the end of the final quarter of 2016. However, hedge fund ownership of the stock fell heavily in the fourth quarter, to 24 hedge funds owning the stock on December 31 compared to 35 owning a quarter earlier.

The Rubicon Project Inc (NYSE:RUBI)

The Rubicon Project Inc (NYSE:RUBI) is an attractive growth stock which has a strong chance to gain value in 2017. The Los Angeles-based company, which helps its clients increase their ad revenue, posted sterling revenue growth of its own until 2016. However, the stock has lost about 66% over the last 12 months amid strategic blunders by the company’s management. Rubicon recently said in a statement that its founder and CEO Frank Addante was stepping down, to be replaced by Michael Barrett. The company said in its third quarter earnings call that it planned to cut 19% of its workforce, a move that will save the company $18 million in 2017. The Rubicon Project Inc (NYSE:RUBI) has no long-term debt. In the fourth quarter of 2016, The Rubicon Project Inc (NYSE:RUBI) earned $0.37 a share on $66.9 million in revenue, better than analysts’ forecasts of $0.15 and $64 million respectively. Heading into 2017, Cliff Asness’ AQR Capital Management had 1.13 million shares of The Rubicon Project Inc (NYSE:RUBI), one of 25 hedge funds in our database which owned the stock.

Zynga Inc (NASDAQ:ZNGA)

Zynga Inc (NASDAQ:ZNGA) shares have gained over 23% year-to-date, as the California-based mobile game developer’s revenue totaled $190.5 million in the fourth quarter, a 3% increase on a year-over-year basis, and above the high-end of its guidance. Zynga’s operating expenses are also decreasing. The company recently acquired four Solitaire smartphone games for $42.5 million from Harpan LLC, one of which is among the top 20 downloaded games according to App Annie. Zynga CEO Frank Gibeau has previously talked about the advertising monetization possibilities for popular card games like solitaire, which explains the hefty price tag. Last month, Wedbush reiterated an ‘Outperform’ rating on Zynga shares, with a price target of $4.25. Of the 742 hedge funds tracked by Insider Monkey which filed 13Fs for the December quarter, 27 held long positions in Zynga Inc (NASDAQ:ZNGA) at the end of 2016.

Oclaro, Inc. (NASDAQ:OCLR)

Oclaro, Inc. (NASDAQ:OCLR) has been in the news recently amid several analyst firms upping their price targets on the stock following the release of its upbeat second quarter results. The company earned EPS of $0.21 on $153.9 million in revenue for the quarter, above the Street’s forecasts of $0.18 and $153.52 million respectively. For its fiscal third quarter of 2017, the company expects revenue of $156-164 million, versus the consensus of $146 million.

Needham & Company recently said in a report that Oclaro shares have “exceptional value”. The firm has a price target of $14 on Oclaro shares, which represents greater than 40% upside. Earlier this month, Piper Jaffray analyst Troy Jensen said in a report that Oclaro has several catalysts, including a possible settlement with ZTE Corp, favorable commentary coming at the industry trade show OFC, and another quarter of “flawless execution”. The firm has a price target of $15 on the stock.

Alex Sacerdote’s Whale Rock Capital Management owns 5.65 million shares of Oclaro, Inc. (NASDAQ:OCLR) as of the end of the fourth quarter of 2016, one of the 40 hedge funds in our system to own the stock at that time.

Disclosure: None