Investing in the technology sector of the market offers numerous opportunities for the savvy investor and many of the stocks are grossly undervalued. With that in mind, I took a look at several undervalued plays in diverse segments of the tech sector that I feel are worthy of further investigation on your part and have earned a spot on my watch list, and hopefully yours, for the next few months.
MEDL Mobile Holdings Inc. (OTCBB: MEDL) is a mobile app pioneer that specializes in developing, marketing and monetizing unique mobile applications. This often overlooked gem is the fastest growing yet most undervalued company on our list. MEDL recently released Key Performance Indicators which confirmed the company’s astounding growth in 2012. The firm boasts a list of high profile partners and clients that encompasses just about every major industry in the United States. It’s been an exciting year so far for MEDL. The company is the creative genius behind the madly popular App Incubator which will be the basis of a new television show. They also announced the beta launch of their new Hang w/ app this week. The platform permits real-time live video to be sent from one phone to multiple phones at the same time. It is the first live mobile broadcast service for fans and celebrities. To top it all off, MEDL announced today that it has been selected by Hyundai Motor America to develop a series of apps for them. As of yet the exact number of apps is not known but the relationship will be a significant long-term one between the two companies. MEDL has a market cap of $18.28 million and shares were trading up at close of market today $0.42. Shares have been climbing steadily for the past week This company is poised for explosive growth and is sorely undervalued at this price. Now is the optimal time to make this play.
Vonage Holdings Corporation (NYSE: VG) offers voice and messaging options over broadband networks to home consumers and small business customers in North America and the United Kingdom. The company has a market cap at $55.14 million, with the most recent closing price at $2.50. Vonage revenue was down 4.12 percent during the most recent quarter going from $216.51 million to $207.58 million year-over-year. Accounts receivable jumped by 65.69 percent during the same time frame; $29.41 million versus $17.75 million. Receivables, as a percentage of current assets, increased from 17.11 percent to 19.93 percent during the most recent quarter. There is a lot of bang for your buck here. This is another one worthy of a hard look. It too is undervalued at this price and shows every sign of growth when the new numbers are out for Q4 2012. Vonage will report its financial results for the fourth quarter and full year 2012 on 13 February 2013.
Zagg Inc (NASDAQ: ZAGG) makes and sells protective covers and audio and power accessories for electronic and hand-held gadgets. Zagg operates in three distinct parts: ZAGG segment, iFrogz segment and HzO segment. The company’s invisibleSHIELD is designed expressly for Apple (NASDAQ: AAPL) iPods, iPhones and iPads. It is also utilized on laptops, cell phones, digital cameras, watch faces, global positioning systems (GPS), gaming devices, and myriad other items. Zagg has a market cap of $206.41 million and closed most recently at $6.74. The company reported Q3 earnings for 2012 of 23 cents. Sales rose a very healthy 30 percent to $59.8 million, 84 percent of which came from indirect channels such as the company’s mall cart and kiosk program. The company has consistently beat quarterly estimates for years and is rated a strong buy by Zacks. In Q3 2012, gross margin expanded 210 basis points to 44.5 percent, while gross profit grew 37 percent to $26.6 million. As a result, operating profit rose 54 percent to $7.1 million, compared with $4.6 million in the previous year. Zagg has a one year ROE of 23.4 percent, considerably higher than the peer group average of 8.5 percent.
Any one of these companies is worth a look and they will offer diversification as tech stocks in your portfolio. As always do your homework and choose what is best for you and your investing style. But as undervalued stocks, they are pretty hard to pass up, especially MEDL, at least to my mind.