Four Tech Stocks to Buy at "Stupid Cheap" Prices

Investors who panic during a market correction miss out on the chance to pick up great tech stocks to buy - at a bargain. Take a look...

It was Oct. 19, 1987 - Black Monday - and the stock market had just crashed. At the time, I was an analyst in the Financial District in San Francisco.

My then-boss called me from Wall Street. And he sounded like he was ready to sell everything.

But I had other ideas.

After all, if Macy's holds a 25% off sale, shoppers rush down in droves. So why do so many investors panic when the market corrects?

By doing so, they miss out on great bargains.

We're not doing that. We're going shopping...

Fill the Shopping Bag with Cheap Tech Stocks to Buy

Stocks to Buy CheapWhile my boss freaked out, I got excited about all the money I would soon make. And history proved me right.

Had you simply invested $2,000 in a Dow Jones Industrial Average index fund the day after the 1987 crash and held it through this week, you'd now have $17,800 - a 790% jump. And that includes the dot-com crash of 2000-2002 and the Great Recession of 2007-2009.

That's why you should look at corrections as a chance to add to your portfolio's long-term gains. And yet, sell-offs present us with a challenge as well. If we buy on the dips too early, we run the risk of getting stopped out to protect capital.

To avoid that, I've developed a system to determine if a stock has fallen so far that it's become available at what I call a "Stupid Cheap Price."

You could look at financial data to find winners you think should rebound based on cash flow, earnings, and operating margins. However, that can consume hours of your time.

There's a simpler method.

All you need to do is look at the stock's 50-day moving average, and then take a discount from that to arrive at an attractive price - the Stupid Cheap Price.

This is a price that over the past 10 weeks investment pros think should be the minimum price for this stock.

I've used this process over many years of investing to great effect. And I generally like to get a discount of at least 10% from the 50-day line.

With that in mind, I want to share with you four stupid cheap stocks to buy that should be on every tech investor's shopping list.

Stupid Cheap Tech Stock No. 1: Bitauto

Concern about China's slowing growth was a major factor in the recent sell-off. The World Banknow estimates that the Chinese economy will grow at 6.9% a year, down from earlier forecasts of 7.1%.

As a group, Chinese e-commerce stocks got hammered, with Bitauto Holdings Ltd. (NYSE: BITA) coming under severe pressure. From its recent closing high of $96.14 reached on Aug. 26 to its recent low of $63.09 on Oct. 13, the stock declined 34.3%. (We picked up the stock for around $31 back in April.)

The leader in China's automotive e-commerce sector, Bitauto sells online advertising and provides reviews and pricing data for consumers. It also serves as an online showroom for both new- and used-car dealers.

It has operating returns of more than 21% and earns 23% on stockholders' equity. The most recent quarterly earnings were up 107.6%. With a market cap of $3.29 billion, Bitauto trades at about $75.

Even though Bitauto quickly recovered much of its value, the stock remains a bargain. Stupid Cheap Price:$70.90.

Stupid Cheap Tech Stock No. 2: U.S. Silica

Energy stocks have come under great pressure because global prices for petroleum products have dropped sharply since the end of the summer. And that's had a dramatic impact on shares of U.S. Silica Holdings Inc. (NYSE: SLCA), which I introduced to you back in February, when it was trading around $29.50.

The company provides the high-grade silica sand the fracking industry relies on to help extract natural gas and oil hidden deep in shale deposits.

And in a positive sign for folks who already hold U.S. Silica, Forbes recently recognized the Frederick, Md.-based company as America's Best Small Company. More investors are going to start noticing our find soon, which should fill our sails.

Investors recently dumped shares in a panic without realizing a compelling part of the story - it's not all about energy. U.S. Silica's specialty division, which accounts for 40% of sales, supplies such industries as housing, water filtration, and performance chemicals.

With a market cap of roughly $2.5 billion, the stock trades at about $47.50. U.S. Silica has operating profits of 19%, earns 23% on stockholders' equity, and recently increased quarterly earnings by 42%.

From its recent closing high of $71.91 on Sept. 2 to its low of $40.33 on Oct. 14, the stock lost 44% of its value. It quickly rebounded by some 17% in just three sessions, but it's still well below my... Stupid Cheap Price:$55.30.

Stupid Cheap Tech Stock No. 3: FleetCor

FleetCor Technologies Inc. (NYSE: FLT) also got caught up in the energy sector's correction - good news for bargain hunters like us. While the company has substantial exposure to oil and gas firms, this big-cap leader is hardly an energy play.

The company, which I brought to you in May 2013 when it was trading around $75, provides payment-processing services for businesses, commercial fleets, major oil companies, petroleum marketers, and government agencies.

And the advent of electronic transactions has been a boon for FleetCor. Last year, it conducted more than 327 million transactions, or one for nearly every man, woman, and child in the United States.

With an $11 billion market cap, the stock trades at roughly $133 a share. It has operating margins of more than 47%, earns 24.5% on stockholders' equity, and recently grew quarterly earnings by 217%.

From its recent closing high of $148.11 on Aug. 22 to its recent low of $123.44 on Oct. 13, FleetCor fell by 20%. It has rebounded back well above our Stupid Cheap Price, but it's a stock you always should be watching. Stupid Cheap Price: $125.95.

Stupid Cheap Tech Stock No. 4: Ambarella

A maker of video processing chips, Ambarella Inc. (Nasdaq: AMBA) is a big hit in the rapidly evolving world of wearable technology. And it's probably best known for supplying the semiconductors used in the popular Hero action cameras made by GoPro Inc.(Nasdaq: GPRO).

Ambarella, which we first started looking at in August 2013, also targets such growth markets as connected cars, video surveillance, and commercial broadcast of ultra-high-definition television (UHDTV).

With a market cap of $1.4 billon, the stock trades at roughly $38.50 a share. It has 17.5% operating margins and a 19% return on equity and recently grew quarterly earnings by nearly 49%.

From its recent closing high of $44.47 on Sept. 29 to its closing low of $35.24 on Oct. 13, Ambarella fell nearly 21%. Stupid Cheap Price: $33.

Now then, three of these four stocks are already trading above their Stupid Cheap Prices after making sharp rebounds just days after their big drops.

So, here's how to play it so you don't miss out. Use my Cowboy Split strategy, in which you buy a portion at market and then put in a lowball order for more at the Stupid Cheap Price.

In other words, the market's recent sell-off has turned out to be good news.

It's given us at least four winning tech stocks to buy at huge discounts and also allows us to put in reservations for future "sale" prices.

These are both proven, effective ways to use market volatility to boost your long-term gains - and keep you on the road to wealth.

More from Michael Robinson: In corporate spin-offs, companies unlock hidden values in their operations and pass them on to shareholders - offering low risks and market-beating profits. Here's how to profit from massive spin-offs in just one play.

About the Author

Michael A. Robinson is a 36-year Silicon Valley veteran and one of the top tech and biotech financial analysts working today. That's because, as a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs, scientists, and high-profile players. And he brings this entire world of Silicon Valley "insiders" right to you...

  • He was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon.
  • He was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
  • As cyber-security was becoming a focus of national security, Michael was with Dave DeWalt, the CEO of McAfee, right before Intel acquired his company for $7.8 billion.

This all means the entire world is constantly seeking Michael's insight.

In addition to being a regular guest and panelist on CNBC and Fox Business, he is also a Pulitzer Prize-nominated writer and reporter. His first book Overdrawn: The Bailout of American Savings warned people about the coming financial collapse - years before the word "bailout" became a household word.

Silicon Valley defense publications vie for his analysis. He's worked for Defense Media Network and Signal Magazine, as well as The New York Times, American Enterprise, and The Wall Street Journal.

And even with decades of experience, Michael believes there has never been a moment in time quite like this.

Right now, medical breakthroughs that once took years to develop are moving at a record speed. And that means we are going to see highly lucrative biotech investment opportunities come in fast and furious.

To help you navigate the historic opportunity in biotech, Michael launched the Bio-Tech Profit Alliance.

His other publications include: Strategic Tech Investor, The Nova-X Report, Bio-Technology Profit Alliance and Nexus-9 Network.

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